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19 January, 23:02

Yield to maturity Radoski Corporation's bonds make an annual coupon interest payment of 7.35%. The bonds have a par value of $1,000, a current price of $1,130, and mature in 12 years. What is the yield to maturity on these bonds? a. 5.52%b. 5.82%c. 6.11%d. 6.41%e. 6.73%

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  1. 20 January, 00:46
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    b. 5.82%

    Explanation:

    In this case, you are asked to find the I/Y or the YTM. Using a financial calculator, enter the following inputs;

    Maturity of the bond; N = 12

    Face value; FV = 1,000

    Coupon payment; PMT = 7.35%*1000 = 73.5

    Price of the bond; PV = $1,130

    Next, compute the YTM;

    CPT I/Y = 5.815

    Therefore, the YTM is 5.82%
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