.

Yield to maturity--annual bond Answer: a Diff: E

Enter N = 11; PV = -865; PMT = 80; FV = 1000; and then solve for I/YR =
10.0868%  10.09%.

. Yield to maturity--semiannual bond Answer: c Diff: E

N = 12  2 = 24; PV = -1080; PMT = 50; FV = 1000; and then solve for I =

4.4508%  2 = 8.9016%.
. Yield to maturity--semiannual bond Answer: b Diff: E

Enter the following input data in the calculator:

N = 18; PV = -920; PMT = 35; FV = 1000; and then solve for I/YR =
4.1391%. Convert this semiannual periodic rate to a nominal annual
rate, 4.1391%  2 = 8.2782%  8.28%.

. YTM and YTC--semiannual bond Answer: e Diff: E

To calculate YTM:
N = 28; PV = -1075; PMT = 40; FV = 1000; and then solve for I/YR = 3.57%
 2 = 7.14%.

To calculate YTC:
N = 10; PV = -1075; PMT = 40; FV = 1050; and then solve for I/YR = 3.52%
 2 = 7.05%.
. Yield to maturity and bond value—annual bond Answer: d Diff: E

Step 1: Find the YTM. N = 20; PV = -925; PMT = 90; FV = 1000; and then
solve for I = YTM = 9.8733%.

Step 2: Solve for P5. In 5 years, there will be 15 years left until
maturity, so the price at t = 5 is: N = 15; I/YR = 9.8733; PMT =
90; FV = 1000; and then solve for PV = -$933.09. VB = $933.09.

. Current yield Answer: b Diff: E

Current yield = Annual coupon payment/Current price.

Step 1: Find the price of the bond:

N = 9; I/YR = 10; PMT = 70; FV = 1000; and then solve for PV =
-$827.23. VB = $827.23.

Step 2: Calculate the current yield: CY = $70/$827.23 = 8.46%.

. Current yield Answer: d Diff: E

Current yield = Annual coupon payment/Current price.

 Step 1: Find the price of the bond:
N = 12; I/YR = 9.5; PMT = 85; FV = 1000; and then solve for PV
= -$930. VB = $930.

Step 2: Calculate the current yield: CY = $85/$930 = 9.14%.

. Current yield Answer: c Diff: E

The current yield is equal to the annual coupon divided by the price.
The annual coupon is given: 0.08  $1,000 = $80. You need to find the
price before calculating the current yield.

Step 1: Using the TVM inputs of your calculator, find the bond’s price:
N = 15; I = 7; PMT = 80; FV = 1000; and then solve for PV =
-$1,091.08. VB = $1,091.08.

Step 2: Calculate the bond’s current yield:

Current yield = Annual coupon/Current price
Current yield = $80/$1,091.08
= 7.33%.

. Current yield and yield to maturity Answer: b Diff: E

Current yield is calculated as: $80/$985 = 8.12%.

N = 12; PV = -985; PMT = 80; FV = 1000; and then solve for I/YR (YTM) =
8.20%.

. Future bond value--annual payment Answer: b Diff: E N

Two years from now, there will be 8 years left to maturity. Use your
financial calculator to determine its price by entering the following
data as inputs:

N = 8; I = 10; PMT = 80; FV = 1000; and then solve for PV = -$893.30.

VB = $893.30.