Yield to Maturity Questions 55-57:

55) How would you define Yield to Maturity (YTM) and what 3 assumptions need to be met for the YTM to hold true?

56) A bond with 20 years remaining until maturity is currently trading for $111 per $100 of par value, which as we learned in class is a premium. The bond offers a 5% coupon rate with interest paid semi-annually. What is the bond's annual yield to maturity (YTM)?

57) A bond with 5 years to maturity is currently trading for $101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semi-annually. The bond is first callable in 3 years at 102 per 100 of par value, in 4 years at 101 per 100 of par value and in 5 years at par (100). (Question is worth 4 points)

a) What is the bond's annual yield to maturity (YTM):

b) What is the bond's annual yield to first call?

c) What is the bond's annual yield to second-call?

d) What is the bond's yield-to-worst?