How to find yield to maturity formula

    • [DOC File]Answers to Text Discussion Questions

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      If we guess a yield to maturity for the T-Bill, r, we can then value the first two T-Bond cash-flows 1 year forward. The return on the T-Bond is then (99.17+.625*(1+r)^0.5+.625 -100)/100. This must be the return on the T-Bill (1+r)^1-1 = r.

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    • [DOC File]Quiz 1: Fin 819-02

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      Homework Assignment – Week 2. Chapter 3. Write down the formula that is used to calculate the yield to maturity on a 20-year 10% coupon bond with $1,000 face value that sells for $2,000.

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    • [DOC File]Quantitative Problems Chapter 10

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      Yield to maturity and bond value—annual bond Answer: d Diff: E. Step 1: Find the YTM. N = 20; PV = -925; PMT = 90; FV = 1000; and then solve for I = YTM = 9.8733%. Step 2: Solve for P5. In 5 years, there will be 15 years left until maturity, so the price at t = 5 is: N = 15; I/YR = 9.8733; PMT = 90; FV = 1000; and then solve for PV = -$933.09.

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    • [DOC File]Solutions to Quiz 2 are after the questions

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      You will find that the yield to maturity on a semi-annual basis is 4.26%. This implies a bond equivalent yield to maturity of: 4.26% ( 2 = 8.52%. Effective annual yield to maturity = (1.0426)2 – 1 = 0.0870 = 8.70%. Since the bond is selling at par, the yield to maturity on a semi-annual basis is the same as the semi-annual coupon, 4%.

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    • [DOCX File]Homework Assignment – Week 2

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      With PV $819, FV $1,000, PMT 0 and N 2, the yield to maturity on the two-year zero-coupon bonds is 10.5% for the two-year annuities, PV $1,712.52, PMT 0, FV $2,000 and N 2 gives a yield to maturity of 8.07%. The zero-coupon bonds are the better buy. 5. Consider the following cash flows. All market interest rates are 12%.

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    • How to Calculate Yield to Maturity: 9 Steps (with Pictures)

      22. To find the number of years to maturity for the bond, we need to find the price of the bond. Since we already have the coupon rate, we can use the bond price equation, and solve for the number of years to maturity. We are given the current yield of the bond, so we can calculate the price as: Current yield = …

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    • [DOC File]Chapter 10

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      A) The spot interest rate is a weighted average of yields to maturity . B) Yield to maturity is the weighted average of spot interest rates . C) The yield to maturity is always higher than the spot rates . D) All of the above. E) None of the above . Answer: B. 24. …

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    • [DOC File]Bond Features

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      A 9% discount rate provides the bond price $839.27. 9% is the yield to maturity. Approximate yield to maturity. 11. What is the approximate yield to maturity of a 14 percent coupon rate, $1,000 par value bond priced at $1,160 if it has 16 years to maturity? Use Formula 12–2. 12-11. The calculation is done on an annual basis. Yield to call. 12. a.

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    • [DOC File]Solutions to Questions and Problems

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      3. The yield to maturity (or “YTM”) is the interest rate required in the market on a bond. In other words, YTM is the rate that makes the price of the bond just equal to the present value of its future cash flows. Suppose the current bond price is $930. Annual coupon rate is 7%, maturity is 10 years from now, and face value is $1000. Find YTM.

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