Exercise $2\_$ch$15\_$no$2($YTM$)$: On $1$ August $2015,$ you are offered the following bond:

$$ Face value: $$1000$

$$ Coupon rate: $6\%$

$$ Coupon payments: Once a year on August $2002,2003,...,2012$

$$ Bond Price: $$1252\mathrm{.}00$

$$ Bond$$s face value repaid on last coupon date

a$.)$ Use Excel$$s IRR function to compute the bond$$s yield to maturity $($YTM$).$

b$.)$ Use Excel$$s XIRR function to compute the bond$$s yield to maturity $($YTM$).$

COMPUTING THE YTM FOR A BOND

Bond face value $1,000\mathrm{.}00$

Coupon rate $6\%$

Bond price $1,252\mathrm{.}00$

Year Cash flow

$01-$Aug$-15$

$01-$Aug$-16$

$01-$Aug$-17$

$01-$Aug$-18$

$01-$Aug$-19$

$01-$Aug$-20$

$01-$Aug$-21$

$01-$Aug$-22$

$01-$Aug$-23$

$01-$Aug$-24$

$01-$Aug$-25$

$01-$Aug$-26$

Section a$.$

Yield to maturity $($IRR$)$

Section b$.$

Yield to maturity $($XIRR$)$