FV = $100 Price = $106

Accounting Aug 08, 2020

FV = $100

Price = $106.68

Coupon Rate = 5.5%

Term = 5 years

Given the information above calculate the yield to maturity (YTM). Calculate as a percentage correct to two decimal places. Do not enter the percentage (%) sign.

Expert Solution

We can calculate the yield to maturity by using the following formula in excel:-

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

Here,

Rate = Yield to maturity

Nper = 5 periods

Pmt = Coupon payment = $100*5.5% = $5.5

PV = $106.68

FV = $100

Substituting the values in formula:

= rate(5,5.5,-106.68,100)

= 4% Or 0.04

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