1. (YTM) The current price of a 10-year U.S. Treasury Note with eight years to maturity is $1,080. Assuming the usual maturity value of $1,000 and semi-annual coupon payments, what is the Yield to Maturity (YTM) for this bond?

Bond Formula P_o = I[1-(1+i)^-n] + M(1+i)^-n

i

Step 1: set up the equation needed to solve this problem.

Step 2: provide an estimate as to what the YTM should be based (and explain that estimate in terms of the current price).

Step 3: find the value (using a financial calculator, Excel, or trial and error) to the nearest basis point (i.e. 0.01%).