Answered

IDNLearn.com is designed to help you find reliable answers quickly and easily. Get step-by-step guidance for all your technical questions from our knowledgeable community members.

A US Treasury is quoted at $137.111 based on $100 par. Today is 12/31/2020. Assume that transaction date and settlement date is the same. The coupon rate is 8%. The bond has 30-year maturity. What is the yield-to-maturity

Sagot :

Parrainidn

Answer: 5.46%

Explanation:

You can use excel to solve for this.

Number of periods = 30

Coupon = Payment = 8% * 100 = $8

PV = $137.11

FV = $100 par value

Do this and the YTM would be: 5.46%

This makes sense because the bond is trading at a premium which means that the YTM is less than the coupon rate.

View image Parrain
Thank you for using this platform to share and learn. Don't hesitate to keep asking and answering. We value every contribution you make. Your questions find answers at IDNLearn.com. Thanks for visiting, and come back for more accurate and reliable solutions.