Calculate the yield-to-maturity on a Disney bond that matures in 13 years, pays 7.0% coupon, semi-annually, with a current price of $148.026. bond has a par value of $1,000

 

Number of periods = 13 years * 2 = 26 semi-annual periods.

Coupon per period = (Coupon rate / Number of coupon payments per year) * Par value.

Coupon per period = (7% / 2) * $1000.

Coupon per period = $35.

Bond Price =  Coupon / (1 +yield-to-maturity / 2)^period + Par value / (1 +yield-to-maturity / 2)^period

$1480.26 = $35 / (1 +yield-to-maturity / 2)¹ + $35 / (1 + yield-to-maturity / 2)² + $35 / (1 +yield-to-maturity / 2)²⁶ + $1000 / (1 + yield-to-maturity/ 2)^26.

When using Texas Instruments BA 2 plus calculator,

SET N = 26, PV = -1480.26, FV = 1000, PMT = 35.

CPT --> I/Y = 1.3088%.

Yield-to-maturity = 2 * I/Y.

Yield-to-maturity = 2 * 1.3088%.

Yield to Maturity (YTM) = 2.6176%.