You find the following Treasury bond quote. To calculate the number of years until maturity, assume that it is currently May 2016. The bonds have a par value of $1,000.
Rate Maturity Mo/YR Bid price Ask price Chg Ask Yld
5.374 May 30 104.4991 104.6448 +.4329 ??
In the above table, find the Treasury bond that matures in May 2030. What is your yield to maturity if you buy this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Yield to maturity =
To find the yield to maturity (YTM) for the Treasury bond that matures in May 2030, we need to calculate the number of years until maturity and use the bid price and par value information.
From the information given, we can identify that the bond matures in May 2030. To find the number of years until maturity, we subtract the current year (2016) from the maturity year (2030):
Number of years until maturity = 2030 - 2016 = 14 years
Now, let's calculate the YTM using the bid price and par value.
YTM is the annualized rate of return earned on a bond if held until maturity, considering the bond's current price and par value. In this case, the bond's par value is $1,000.
To calculate YTM, we can use the following formula:
YTM = (Annual Coupon Payment + ((Face Value - Current Price) / Number of Years to Maturity)) / ((Face Value + Current Price) / 2)
However, the coupon payment is not provided in the information you provided. Without a coupon payment amount, we cannot accurately calculate the YTM.