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20 July, 19:56

Skolits Corp. issued 15-year bonds 2 years ago at a coupon rate of 7.3 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM?

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  1. 20 July, 23:10
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    6.94%

    Explanation:

    The yield to maturity can be computed using excel rate function found below:

    =rate (nper, pmt,-pv, fv)

    nper is the coupons that bond has left to pay i. e 26 semiannual coupons in 13 years

    pmt is the semiannual coupon amount i. e $1000*7.3%*6/12=36.5

    pv is the current market price i. e 103%*$1000=$1030

    fv is the face value of $1000

    =rate (26,36.5,-1030,1000) = 3.47%

    semiannual yield = 3.47%

    annual yield = 3.47% * 2=6.94%
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Home » Business » Skolits Corp. issued 15-year bonds 2 years ago at a coupon rate of 7.3 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM?
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