CFA Practice Question

CFA Practice Question

The spot rates for years 1, 2, and 3 are 5.31%, 5.54% and 5.77% respectively. What is the YTM for a 3 year bond that pays yearly coupons of 5%?
A. 5.5548%
B. 5.7548%
C. 5.6548%
Explanation: First find price of bond by adding present values of coupons and face (paid on maturity). Then find YTM.

User Contributed Comments 3

User Comment
Mariana80 Can anyone explain? No matter how I calculate this I don't get that answer.
Rivermax coupon is 5 so:
5/(1.0531)+
5/(1.0554)^2+
105/(1.0577)^3
=97.97315
Put this into calculator
PV=-97.97315
N=3
PMT=5
FV=100

CPT I/Y =5.7548
chcarnes I did the first part by hand then plugged the PV into the calc
You need to log in first to add your comment.