# Calculating YTM for the Given Bond

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Assume that a Ford bond has a maturity of 30 years. The bond has a face value of $1,000 and a coupon rate of 8% paid semi-annually. The present market price for the bond is $950. Assume your required rate of return on the bond is 9%, given your other opportunities and your appetite for risk. Calculate the return (yield-to-maturity) on the bond.

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Solution depicts the steps to estimate YTM in the given case.

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Face Value of bond=Maturity Value=FV= 1000

Market price of bond=PV= -950 cash outflow

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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India

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