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SWH Corporation issued bonds on January 1, 2004. The bonds had a coupon rate of 5.5%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2019. What is the yield to maturity for an SWH Corporation bond on January 1, 2010 if the market price of the bond on that date is $950

Respuesta :

Tundexi

Answer:

6.23%

Explanation:

From Jan 2019 to Jan 2010 = 9 years

N = 9 years*2 = 18

PV = $950

Coupon payment = $27.5 (1000*5.5%/2)

FV = $1000

We need to solve for YTM using the MsExcel function

Yield to maturity = YTM(n, pv, pmt, fv) * 2

Yield to maturity = YTM(18, 950, 27.5, 1000) * 2

Yield to maturity = 0.03117 * 2

Yield to maturity = 0.06234

Yield to maturity = 6.23%

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