How did we get the par yeild and bond yeild

1. Compute the Price, Par Yield, and Yield to Maturity (YTM) of a 2-year, 6%, Semi-annual Coupon Paying Bond. Assume that the Face value = $100. Cash Flow C+100 R Rate CF(5) OROS 5.0% 3.0 Period 0.5 1.0 1.5 2.0 oRo5.8% 3.0 oRus 6.4% Ce-0.05x0.5 R2,0 6.8% 3.0 + 100 Ce-0.058x 1.0 Price = 98.403 Ce-0.064x1.5 ParYield 6.863% Ce-0.068x2.0 3.0 100e -0.068x2,0 t=2.0 For PY, Solve: 100 = Icel-Rext) + 100e -0.06x2.0 t 0.5 o O CI R Rate CF(5) OROS 5.0% 3.0 R10 5.8% 3.0 ORIS 6.4% 3.0 R20 6.8% 3.0 + 100 Price = 98.403 ParYield 6.863% BondYield = 6.76% $103 $3 Zero Rate(%) 8.0 7.5 7.0 6.5 6.0 5.5 5.0 $3 4.5 + 4.0 + + 0 1.0 For YTM, Solve: t=2.0 Price = t=0.5 2 $3 Maturity + 1.5 + 2.0 0.5 2.5 3e-Yx +100e-Yx2.0