1. The Petit Chef Co. has 7 percent coupon bonds on the market with nine years left to maturity. The bonds make annual payments and have a par value of $1,000. If the bonds currently sell for $1,038.50, what is the YTM?
2. Please write down an equation to solve for YTM.
3. How do you use the Excel function YIELD(Settlement, Maturity, Rate, Pr, Redemption, Frequency) or RENDEMENT.TITRE() in the French version to calculate YTM? What should you fill in for Settlement, Maturity, Rate, Pr, Redemption, Frequency respectively?

Please find below the description for the inputs of YIELD(Settlement, Maturity, Rate, Pr, Redemption, Frequency).

Settlement The security's settlement date.

Maturity The security's maturity date.

Rate The security's annual coupon rate.

Pr The security's price per $100 face value.

Redemption The security's redemption value per $100 face value.

Frequency The number of coupon payments per year. For annual payments, frequency = 1; for semiannual, frequency = 2; for quarterly, frequency = 4.

Note that Dates should be entered by using the DATE function. For example, use DATE(2008,5,23) for the 23rd day of May, 2008.