Can't get this one right - Qbank

Question ID#: 95921 A 10% coupon bond, annual payments, maturing in 10 years, is expected to make all coupon payments, but to pay only 50% of par value at maturity. What is the expected yield on this bond if the bond is purchased for $975? A) 6.68%. B) 8.68%. C) 10.68%. The correct answer was A. PMT = 100; N = 10; FV = -500; PV = 975; CPT ¨ I = 6.68 The result I ma getting is -21.9158! I know it might be silly question for some of you but I ma getting confuse at this stage. Is there any rule to use negative entry for FV or PV and PMT on BA II Plus? I mean difference between: PMT = 100; N = 10; FV = -500; PV = 975 and PMT = - 100; N = 10; FV = 500; PV = - 975 Thanks for help guys.

Use minus sign at PV = -975. in second, you are using negative sign 2 times which is wrong I think

It should be PMT=100 N=10 FV=500 PV=-975 Solve for I You are receiving payments so PMT is +. Think of payments and pv as cash inflows/outflows. Any money you will receive is + and any cash outlay will be negative.

Thanks guys. That is clear now. Don’t know why I got confused, this is the time I believe. Thanks again.