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Homework answers / question archive / Last year Clark Company issued a 10-year, 11% semiannual coupon bond at its par value of $1,000
Last year Clark Company issued a 10-year, 11% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 4 years at a price of $1,050 and it sells for $1,080. What is the nominal yield to maturity? Answer as a percentage with 2 decimals (ex. 10.00%).
Computation of Nominal Yield to Maturity using Rate Function in Excel:
=rate(nper,pmt,-pv,fv)*2
Here,
Rate = Nominal Yield to Maturity = ?
Nper = 10 years * 2 = 20 periods
PMT = $1,000*11%/2 = $55
PV = $1,080
FV = $1,000
Substituting the values in formula:
=rate(20,55,-1080,1000)*2
Rate or Nominal Yield to Maturity = 9.73%
