Question: Please do so as soon as possible. I would like to know in detail which formula this answer applies to. PK Software has 8% coupon

Please do so as soon as possible.

I would like to know in detail which formula this answer applies to.

PK Software has 8% coupon bonds on the market with 18 years to maturity.

The bonds make semiannual payments and currently sell for 93 percent of par.

Yield to Maturit

Number of Periods = 2 * 18 = 36

Coupon = 8%*1000/2 = 40

YTM using Rate function in excel = 2 *

RATE (36,40,-930,1000) = 2* 4.39% =

A.8.78%

What is the effective annual yield?

(1+ YTM/2) -1 =

A.8.97%

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