Bond Pricing. A 30-year maturity bond with a face value of $1,000 make

QUESTION

Bond Pricing. A 30-year maturity bond with a face value of $1,000 makes annual coupon payments and has a coupon rate of 8%. What is the bonds yield to maturity if the bond is selling for:a. $900?b. $1,000?c. $1,100?please show work
Yield to Maturity = [C (FV-MV)/ (M)]/
(FV MV)/2 Where
C = Coupon Payment FV = Face Value MV = Market value M
= Maturity Period If bond is selling for $900 Yield to Maturity = [80 (1000-900)/30]/
(1000 900)/2 =8.97% If bond is selling

r $1000 Yield to Maturity = [80 (1000-1000)/30]/ (1000 1000)/2 =8% If bond is selling for $1100 Yield to Maturity = [80 (1000-1100)/30]/ (1000 1100)/2 =7.18%

ANSWER:

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