1. Winston Enterprises has a 15-year bond issue outstanding that pays an 8% coupon. The bond is currently priced at $894.60 and has a par value of $1,000. Interest is paid semiannually. What is the yield to maturity?

The yield to maturity is 9.32%

Explanation:

In calculating the yield to maturity, I made use of rate formula in excel, which is given rate(nper,pmt,-pv,fv)

the nper is the duration of the bond, 15 years multiplied by 2 as the 2 reflects that coupon interest is paid twice a year.

pmt is the periodic coupon interest payable by the bond ,which 8%/2*$1000=$40

pv is the current price of the bond at $894.60

fv is the face value of $1000

rate(30,$40,-$894.60,1000)

rate=4.66% semi annually

rate=2*4.66%=9.32%  per year

find attached.

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