Do the Math 14-7
Yield, Price, and YTM

A corporate bond maturing in 22 years with a coupon rate of 8.2 percent was purchased for $1,100 and is now selling for $1,220.

1. What is its current yield? Round your answer to one decimal place.

   %

2. Calculate the bond's YTM using Equation 14.5 or the Garman/Forgue companion website. Round your answer to two decimal places.
   

   %

3. What will the bond's selling price be if comparable market interest rates rise 3.8 percent points in two years? (Hint: Use Appendix A-2 and Appendix A-4 or the Garman/Forgue companion website.) Round Present Value of a Single Amount and Present Value of a Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest cent.

   $

Appendix 2-4 Punt Value Series of Equal Amounts an Annuity of S1 Rosewived at the end of Each Period IUsed to compute the Discounted Present Value of a Stream of income Payments) 39 45 34 64 7% 101 129 139 HS 19% 16% 17% 10% 9%8 404 ** XXX WOW! 10 ray 2011 Vi 195 SEZ + SI E HAS . 265 90 3 15 TU CH FILT TH 928 23 2771 2 1944 140 2 1 1 w 19 Ai! CRC BO TER 1 HD USH 30397 VI. MIT VT YAT TE FI 1111: SH CNN . . VIT NI SORT WICE TRN ! TE PUR IT VIT . . 2009 250 25 3 LOG TEX 13 WA CUK X2 14 I 100 90 CR TE TH 1564 S: SI ws .. Boa IN WWE YA IT RAT 200 Wow 27 VER ME 11 IWI E EX ve HOW ER IT: LOR 10 W # ITT ws 10 21 TH WER BER 2 8. I! . YEY . TAI WE RU US is EXH Pri IRI 200 TIR 121 . A TID w >> XXX VA C C 3 CH . com 11 w STAK 1 TH! 7 . WI: 11! 1. DU we a WON ANT 11 ST . DS a > . INY EU VI 4 11H BIS H HO UN . HSP AY inne LIDER e IH 12211 EX 162 ty 11 19 5 ART 5390500 11 TX T. 12.9% 16 40 2 w NH IKH 2N 59 HH 11 NY D. KM 9181 EN 11 ENT C ILU LI STI . M UNIT w 11 IL . 500 21 36. WW KE SI LA . www TAN MO SH (14.5) I + [(FV - CV)/N] YTM (FV + CV)/2 where I = Interest paid annually in dollars FV = Face value CV = current value (price) N = Number of years until maturity