Yield to maturity on a 30 year bond
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Consider a 30-year bond issued two years ago with a 9 percent coupon rate and $1,000 par value. The bond makes semi-annual payments and currently sells for $906.51. What is the bond's yield to maturity? (YTM) Why is the bond is selling at a discount?
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Solution Summary
This solution shows how to calculate the yield to maturity on a 30 year bond and explains why the bond is selling at a discount.
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** Please see the attached file for an Excel formatted copy of the solution response **
Consider a 30-year bond issued two years ago with a 9 percent coupon rate and $1,000 par value. The bond makes semi-annual payments and currently sells for $906.51.
What is the bond's yield to maturity? (YTM)
Answer: 10.00% (see calculations below)
Remaining years=30-2= 28 years
Yield to ...
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