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A US Treasury is quoted at $137.111 based on $100 par. Today is 12/31/2020. Assume that transaction date and settlement date is the same. The coupon rate is 8%. The bond has 30-year maturity. What is the yield-to-maturity

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Parrain

Answer: 5.46%

Explanation:

You can use excel to solve for this.

Number of periods = 30

Coupon = Payment = 8% * 100 = $8

PV = $137.11

FV = $100 par value

Do this and the YTM would be: 5.46%

This makes sense because the bond is trading at a premium which means that the YTM is less than the coupon rate.

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