bond pricing quiz

madhuri1682
Good Student
Posts: 29
Joined: Thu Oct 04, 2012 2:09 am

bond pricing quiz

Postby madhuri1682 » Fri Nov 02, 2012 11:37 am

A firm has just issued $1,000 face value bonds with a coupon rate of 8%, paid semi-annually, and a maturity of 15 years. If the issue price for this bond is $785.50, what is the yield-to-maturity, stated annually?
Choose one answer.
a. 9.872 percent
b. 10.365 percent
c. 10.942 percent
d. 11.120 percent
The correct answer is: 10.942 percent.

how do we calculate?
can we calculate this using the calculator?

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AMITAG1990
Finance Junkie
Posts: 89
Joined: Sat Sep 22, 2012 12:35 pm

Re: bond pricing quiz

Postby AMITAG1990 » Fri Nov 02, 2012 3:40 pm

yes we can calculate it by our calc,
just enter the value in calc with following notation which is in 3rd row of calc and fix it by pressing cpt buttom..

N=30(15*2)
Pmt =40(1000*.04)
FV=1000
PV = -785.5

and now press yield buttom, whatever you will get multiply it by 2, you will get the annual yield value i.e 10.942

content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: bond pricing quiz

Postby content.pristine » Fri Nov 02, 2012 4:16 pm

Thats absolutely right~!
Thanks Amit
8-)

madhuri1682
Good Student
Posts: 29
Joined: Thu Oct 04, 2012 2:09 am

Re: bond pricing quiz

Postby madhuri1682 » Sat Nov 03, 2012 12:40 pm

thank u so much..:)


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