Question

Footsteps Co. has a bond outstanding with a coupon rate of 6.4 percent and annual payments. The bond currently sells for $964.14, matures in 22 years, and has a par value of $1,000. What is the YTM of the bond

Answer 1

Answer:

YTM of the bond = 6.72%

Explanation:

Coupon rate =6.4%

Par value = $1,000

Annual coupon = 6.4%*1000 = $64

Current price = $964.14

Nper = 22 years

YTM of the bond = RATE(nper,pmt,pv,fv) (Using MS Excel)

YTM of the bond = RATE(22,-64,964.14,1000)  

YTM of the bond = 6.72%