Bond Yield Measurement: Examples

§An 8% coupon, 30-year bond is selling at $1276.76. First
solve the following equation:

§This equation is
solved by r = 0.03.

§The
yield-to-maturity is given by 2 x 0.03 = 6%

§The effective annual
yield is given by (1.03)2 - 1 = 6.09%