Question: Using term structure from Table 4-2 find Yield to maturity, the coupon and par yield for a two-year bond with semi-annual coupon to be issued

Using term structure from Table 4-2 find Yield to maturity, the coupon and par yield for a two-year bond with semi-annual coupon to be issued today. I'm not sure if this is right this my excel

Using term structure from Table 4-2 find Yield to
Table 4-2 Maturity Zero Rate Discount Maturity 2 years 1.5 (years) (% cont. comp. factor Face value $100 $100 0.5 % 1.98 Coupon rate 6.00% 5.00% 5.80% 0.94 Payment 2 per year 1.5 5.40% 0.91 Per period coupon $3 $2.50 2 6.80% 0.87 Yield to Maturity Maturity Zero Rate Discount price $98.385 =coupon*SUM(H4:H $ 97.91 (years) (% cont. comp.) factor Bond yield using Excel 6.878% =2*RATE(C3*C6,co 6.481% 0.5 6.76% 0.97 Continuously compounded bond yield (using Goal 6.757% 5.76% 0.93 Seek) Continuously compounded bond yield (using formuila) 6.762% =2*LN(1+C12/2) 6.378% 1.5 6.76% 0.90 Calculated price 98.39450 =coupon*SUM(H12:H15)+face*H15 2 6.76% 0.87 Target cell for Goal Seek 0.01 =C15-C11 Par Yield Maturity Zero Rate Discount Par value S 100.00 (years) (% cont. comp.) factor Payment frequency 2 0.5 5% 0.98 Coupon (using Goal Seek) 3.44 1 5.80% 0.94 Calculated Price 100.00 =B22*SUM(H21:H24)+B20*H24 1.5 .40% 1.91 Target cell for Goal Seek =B20-B23 2 6.80% ).87 Annual Coupon (using Goal $ 6.87 =B22*B21 Annual Coupon (using form $ 6.87 =B20*(1-H24)*B21/SUM(H21:H24) $ 6.47 Maturity Zero Rate Discount (years) (% cont. comp.) factor Par yield 6.87% =B26/B20 6.47% D.5 5.87% 1.97 Par yield (continuous) 6.757% =2*LN(1+B28/2) 6.372% 6.87% 0.93 1.5 6.87% 0.90 2 6.87% 1.87

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!