Multiple Choice

Finance May 21, 2021

Multiple Choice. Tor A fixed rate bond, currently priced at 102.6033058, has one year remaining to maturity and is paying an 23% coupon. Assuming that the coupon is paid semiannually and that the face value is 100, what is the yicld to maturity of the bond? a.10% b. 11% 20% 12% e. 21%

Expert Solution

Computation of Yield to Maturity using Rate Function in Excel:

=rate(nper,pmt,-pv,fv)*2

Here,

Rate = Yield to Maturity = ?

Nper = 1 Year * 2 Periods = 2 Periods

PMT = $100*23%/2 = $11.50

PV = $102.6033058

FV = $100

Substituting the values in formula:

=rate(2,11.50,102.6033058,100)*2

Rate or Yield to Maturity = 20%

So, the correct option is C "20%".

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