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    Bond yields

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    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

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    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

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