Bond Yield and Duration
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Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities:
Bond Coupon (%) Price (%)
2 81.62
4 98.39
8 133.42
________________________________________
a. What is the yield to maturity for each bond? (Round to 1 decimal place.)
Bond Coupon (%) YTM
2 %
4 %
8 %
________________________________________
b. Which bond offered the highest yield to maturity?
2% coupon bond
4% coupon bond
8% coupon bond
c. Which bond offered the lowest yield to maturity?
8% coupon bond
2% coupon bond
4% coupon bond
d-1. Which bond had the longest duration?
2% coupon bond
4% coupon bond
8% coupon bond
d-2. Which bond had the shortest duration?
2% coupon bond
4% coupon bond
8% coupon bond
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Solution Summary
Excel spreadsheet attached answers multiple questions on bond yield, duration and coupons with calculations visible by selecting cells.
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