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A company has 8 percent coupon bonds making semiannual payments with a YTM of 7 percent. These bonds currently sell for 104.83 percent of par value. How many years do these bonds have left until they mature?   Coupon rate = 7.8% Par Value = 1000 Market Value = 108%* 1000 = 108 Number of Periods(n) = 2*(12-2) = 20 Coupon = Coupon rate * Par value /2 = 7.8% * 1000/2 = 39 YTM using rate function of Excel = 2 * RATE(20,39,-1080,-1000) = 6.68%

A company has 8 percent coupon bonds making semiannual payments with a YTM of 7 percent. These bonds currently sell for 104.83 percent of par value. How many years do these bonds have left until they mature?   Coupon rate = 7.8% Par Value = 1000 Market Value = 108%* 1000 = 108 Number of Periods(n) = 2*(12-2) = 20 Coupon = Coupon rate * Par value /2 = 7.8% * 1000/2 = 39 YTM using rate function of Excel = 2 * RATE(20,39,-1080,-1000) = 6.68%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A company has 8 percent coupon bonds making semiannual payments with

a YTM of 7 percent. These bonds currently sell for 104.83 percent of par

value. How many years do these bonds have left until they mature?

 

Coupon rate = 7.8%

Par Value = 1000

Market Value = 108%* 1000 = 108

Number of Periods(n) = 2*(12-2) = 20

Coupon = Coupon rate * Par value /2 = 7.8% * 1000/2 = 39

YTM using rate function of Excel = 2 * RATE(20,39,-1080,-1000) = 6.68%



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