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What is the yield to maturity (total yield) on a $1,000 bond selling for 113.42 if the bond has a coupon rate of 9% and matures in ten years?

pur-new-sol

Computation of Yield to Maturity using Rate Function in Excel:

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to Maturity = ?

Nper = 10 years

PMT = $1,000*9% = $90

PV = $1,000*113.42% = $1,134.2

FV = $1,000

Substituting the values in formula:

=rate(10,90,-1134.20,1000)

Rate or Yield to Maturity = 7.08%

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