1. A 10 year 8 % coupon (semiannual) bond sells for $1,100, what is the bond holder’s YTM?

PV $1,100
FV $1,000
Periods 10
Coupon Rate 8%
Coupon Payment $80
YTM 6.60%
s YTM?
 2. On the issue date, you bought a 10-year maturity, 7% semi-annual coupon bond. The
bond then sold at YTM of 6%. Now, three years later, the similar bond sells at YTM of 5%.
If you hold the bond now, what is your realized rate of return for the 3 year holding period?

On Issue Date:
Years 10
Coupon Rate 7%
YTM 6%
Number of Payments per Year 2
Face Value $1,000
Semiannual Coupon Payment $35

Settlement Date 01/01/00

Maturity Date 01/01/10
Coupon Rate 7.00%
Yield to Maturity 6.00%
Redemption Value (% of par) $100
Number of Payments 2
Price (% of par) 107.4387374
Price $1,074.39

3 Years Later:
Years 7
Coupon Rate 7%
YTM 5%
Number of Payments per Year 2
Face Value $1,000

Settlement Date 01/01/00

Maturity Date 01/01/07
Coupon Rate 7.00%
Yield to Maturity 5.00%
Redemption Value (% of par) $100
Number of Payments 2
Price (% of par) 111.6909122
Price $1,116.91

Number of Years Held 3

Periods 6
Annualized Rate of Return 7.71%