Determine ytm price formula, Basic Statistics

Assignment Help:

YTM can be determined using the price formula of a bond.

Part a

The present value (price) formula for a zero coupon bond is:

PV = F/(1+i)n

Plugging in the given information,

$300 = $1000/(1+i)15

(1+i)15 = 3.33

1+i = 1.08357

i = YTM = 0.08357 = 8.36%

Thus the YTM of the fifteen-yr zero coupon bond is 8.36%.

Part b

Semiannual coupon = 6%*$500/2 = $15

Plugging in the given information,

Price = $15/(1+(i/2)) + $15/(1+(i/2))2 +..... + $15/(1+(i/2)6 + $500/(1+(i/2)6 = $400

On trial and error using Excel, YTM has been determined to be 7.23%.

Thus the YTM of the three-yr semiannually 6% coupon bond is 14.45%.


Related Discussions:- Determine ytm price formula

Ascertainment bias, Ascertainment Bias A possible form of the bias, ma...

Ascertainment Bias A possible form of the bias, mainly in retrospective studies, which arises from a relationship amongst the exposure to the risk factor and the probability o

Demographic characteristics , Data   If you look at the Variable vie...

Data   If you look at the Variable view (at top of screen - select View and select variables), you will see the names of variables and information about each one.  The lab

Calorimetry, How do I calculate the temperature change of a sample?

How do I calculate the temperature change of a sample?

Analyse resources and accountability, The unfortunately-named (and fictitio...

The unfortunately-named (and fictitious) town of Avalanche, Utah maintains a vibrant and growing ski industry.  As Director of Avalanche's search-and-rescue operations, you are alw

Sampling Error, Use the concepts of sampling error and z scores to explain ...

Use the concepts of sampling error and z scores to explain the concept of distribution of sample means.

Histogram and historigram, show the differences between histogram and histo...

show the differences between histogram and historigram

Applying missing data, For this assignment, you will have to review each co...

For this assignment, you will have to review each column and make a decision for how to adjust for the missing data. After you correct for missing data in each column, please des

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd