Answer:
9.56
Explanation:
We will calcualte the YTM with an aprroximation method:
[tex]YTM = \frac{C + \frac{F-P}{n }}{\frac{F+P}{2}}[/tex]
Coupon payment= 80 (1,000 face value x 8% bond rate)
Face value= 1000 face value
Market Price= 908.3
n= 9
[tex]YTM = \frac{90 + \frac{1,000 - 908.3}{9}}{\frac{1,000 + 908.3}{2}}[/tex]
quotient 9.4522757%
This will be the aproximate YTM
Another way to solve it is with the Excel
we will write each cah flow and use the IRR function
-908.3
80
80
80
80
80
80
80
80
1080 (1,000 principal + 80 coupon payment)
now we write on any empy cell "=IRR(" and select the cells with the cashflow
The YTM will be 9.56%
