Answer:
The answer is
0.615percent for semi annual
Annual YTM =1.2 percent
Explanation:
The formula for determining the Yield-to-Maturity(YTM) is:
PV = PMT/(1+r)^1 + PMT/(1+r)^2 .......PMT/(1+r)^1 PMT + FV/(1+r)^n
We are to calculate Yield-to-Maturity(YTM) which is the rate of return on the bond to an investor.
Using a Financial calculator. Input the following:
N = (17 years - 2 years) x 2 = 30
1/Y = ?
PV = 97percent x $1,000($970)
PMT = 10.1/2 = 5.05 (semi- annual)
FV = $1,000
1/Y = 0.615(semi annual)
Annual YTM = 0.615 x 2
=1.2 percent
