Can somebody check my answer please? Just need to plug it into financial calculator.
a) The 3,000 company bonds (FV = 1000) that are still outstanding were issued several years ago and the coupon rate was set at 8% = $40 payment every six months, which was a competitive rate at the time. Since then interest rates have dropped and the bond price has risen to $1070.20. These bonds mature in four years exactly. What is the yield of these bonds? (Note: You will need access to a spreadsheet or financial calculator for solution)
So I’ve calculated a few different answers (5.975%, 4.299%, 2.149%) but this is the answer I think is correct using my financial calculator but I don’t know…
N = 4
PV = -1070.20
PMT = 40
FV = 1000
Answer: I/YR = 2.1497 %
What’s tripping me up is the semiannual part. Thanks in advance.