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Multiple Choice
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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