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Bond yields

12% coupon bonds, with 5 yrs left to maturity, bonds make annual payments, if the bond currentyly sells for $1,107.93 what is the YTM?

so i did:
12%=$120 every year for 5 years

1,107.93=$120 x [ 1-1 / (1+r)5] /r +1000/(1+r)5 ( the five is an exponent )

yet i do not know how to find the rate of return to finish up

the same problem with these numbers:
9% coupon
15 yrs left to maturity
annual payments
currently sells for $1,157.9

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8.4% coupon bonds, 7yrs left to maturity , semi annual payments, currently sells for 89.317% of par what is the current yield? YTM? and the EAR?

i do not understand which formula to use and where to start because it does not give the par only the % of it. and if i multiply it out it is 89.317x100= 8931.7

the same problem with these numbers:

7.2% coupon bonds
17 years to maturity
semi annual payments
currently sell for 106.077 % of par

Solution Preview

In solving for YTM ( which is the same as IRR) you cannot write the equation and solve for r. You have to use trial and error. Start with an r and chnage the r till you get the right figure. The other method is to use the IRR function of excel.

12% coupon bonds, with 5 yrs left to maturity, bonds make annual payments, if the bond currentyly sells for $1,107.93 what is the YTM?

If we do manually, since the price is higher than $1,000 ( which is usually the par value), the YTM would be less than than the coupon rate and you can start with 10%. At 10% the price of the bond comes to ( you can use the ...

Solution Summary

The solution explains the calculation of current yield, YTM and EAR of a bond

$2.19