1 answer

Find yield to maturity when coupon is paid semianually (Click on the following icon in order...

Question:

find yield to maturity when coupon is paid semianually
(Click on the following icon in order to copy its contents into a spreadsheet.) Coupon Rate Years to Maturity Yield to Maturi
(Click on the following icon in order to copy its contents into a spreadsheet.) Coupon Rate Years to Maturity Yield to Maturity 8% Par Value $1,000.00 $5,000.00 $5,000.00 $5,000.00 25 ? 7% 12% Price $900.00 $5,000.00 $5,380.00 $4,100.00 ?

Answers


2 Par value 3 Semiannual Coupon rate 4 Semiannual coupon payment 5 Number of periods 6 Price 7 Yield to maturity 8 Annualized

2 Par value 3 Semiannual Coupon rate 4 Semiannual coupon payment 5 Number of periods 6 Price 7 Yield to maturity 8 Annualized

Note:

As the coupon payment is made semiannually, we need to divide the annual coupon rate by 2 to get the semiannual coupon rate
Semiannual coupon payment=(Semiannual coupon rate)*(Face value)
As the coupon payment is made semiannually, the number of periods will be 2*(Time to maturity)
The yield to maturity calculated is the semiannual yield to maturity. To get the annualized yield to maturity, we multiplied the semiannual yield to maturity by 2

So, the yield to maturities for the 4 options are:

10.63%
7.00%
10.03%
11.08%

.

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