4-13 Bond yields Example What is the yTMofa 6 annual coupon bond, with a$1,000 face value, which matures in 3 years? The market price of the bond is $1,010. 77 60 60 060 PV= + + 1+r)(1+ 1+r) PV=$1,010.77 Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 4- 13 Irwin/McGraw-Hill Bond Yields Example What is the YTM of a 6 % annual coupon bond, with a $1,000 face value, which matures in 3 years? The market price of the bond is $1,010.77 $1,010.77 (1 ) 1,060 (1 ) 60 (1 ) 60 1 2 3 = + + + + + = PV r r r PV