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Parkway Void Co. Issued 17-year bonds two years ago at a coupon rate of 9.1 percent. The bonds make semiannual payments. If these bonds currently sell for 115 percent of par value, what is the YTM?

Respuesta :

jepessoa

Answer:

7.53%

Explanation:

the yield to maturity = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]

  • coupon = $1,000 x 9.1% x 1/2 (semiannual) = $45.50
  • face value = $1,000
  • market value = $1,000 x 115% = $1,150
  • n = (7 years - 2 years) x 2 semiannual periods = 30

YTM = {$45.50 + [($1,000 - $1,150)/30]} / [($1,000 + $1,150)/2] = $40.50 / $1,075 = 3.7674% x 2 = 7.5349% ≈ 7.53%

The yield to maturity is 7.43%.

Given that,

  • Nper = Number of years = 15 × 2 = 30  
  • PMT = coupon = 1000 × 9.1% ÷ 2 = 45.5  
  • PV = Present value = 1000× 115% = 1150  
  • FV = Future value = 1000

Based on the above information, the calculation is as follow

Here we have to perform the Excel formula  

= rate(30,45.5,-1150,1000,0)× 2  

= 7.43%

Learn more: brainly.com/question/17429689

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