7 FSDNPT(HW) - t/r F(1 r t Solving for r we get 1,030 = 39(1 1(1 r 16/r 1,000(1 r 16 From here you can either guess-and-check for r or you can

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Charlie’s Chocolate Factory issued 15 year bonds 7 years ago. The bonds are American style and have a coupon rate of 7.8%. If the current market price of the bonds is 103 percent of par value, what is the YTM? a. 7.64092992 b. 7.46096177 c. 7.29189890 d. 7.46421649 e. 7.29831752
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Correct Answer: 7.29831752 Algebraic Solution: Bond Value = C[(1 - 1/(1+r)
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Unformatted text preview: t )/r] + F/(1+r) t Solving for r , we get: 1,030 = 39[(1 - 1/(1+r) 16 )/r] + 1,000/(1+r) 16 From here you can either guess-and-check for r or you can perform the following calculator solution Calculator Solution: 16-1,030 39 1,000 N I/Y PV PMT FV 3.64915876 YTM = 3.64915876 x 2 (semi-annual) = 7.29831752 Notes: none...
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This note was uploaded on 05/26/2011 for the course FINA 3000 taught by Professor Laplante during the Spring '08 term at University of Georgia Athens.

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7 FSDNPT(HW) - t/r F(1 r t Solving for r we get 1,030 = 39(1 1(1 r 16/r 1,000(1 r 16 From here you can either guess-and-check for r or you can

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