(Answered) Determining the the yield to maturity

Management Studies

Problem: Suppose that SBC issued a bond at face value on June 15, 2010 that will mature on June 15, 2026. The price of the bond on June 15, 2016 was quoted as $103.2 per $100 of face value. You have taken finance, so you know it will cost you $1032 to buy this $1000 face value bond. The coupon rate is 4.3% with coupons paid semiannually.

Required:

Question 1: If you bought the bond on June 15, 2016 and held it to maturity, find the yield to maturity (Assume you do not get the June 15, 2016 coupon payment).

Question 2: If you bought the bond on June 15, 2010 (when it was issued) and sold it on June 15, 2016, find your return (or yield). Assume you do get the June 15, 2016 coupon.

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