Type the Excel formula for the bond-equivalent yield to maturity of a 4.5 %, $1,000-par, 7-year semi-annual bond priced at 925.60, showing the conversions inside the call.
Type the Excel formula for the bond-equivalent yield to maturity of a 4.5 %, $1,000-par, 7-year semi-annual bond priced at 925.60, showing the conversions inside the call.
Answer
=RATE(7*2,0.045*1000/2,-925.60,1000)*2
RATE gives 0.029043 per half-year; × 2 = 0.058087. The price is negative because you pay it — without the sign change RATE returns #NUM!.
Bigel, Introduction to Financial Analysis (CC BY 4.0) §12.5 — YTM as the inverse of price, shape only; OpenStax Principles of Finance §10.2, 10.4–10.5 — reference only for RATE and call risk; original bonds