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27 February, 02:06

Footsteps Co. has a bond outstanding with a coupon rate of 6.4 percent and annual payments. The bond currently sells for $956.08, matures in 20 years, and has a par value of $1,000. What is the YTM of the bond? a. 6.81% b. 6.69% c. 6.13% d. 5.67% e. 6.40%

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  1. 27 February, 02:32
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    The answer is A.

    Explanation:

    Yield-to-maturity is the rate of return an investor is expecting from his bonds.

    Number of years (N) - 20 years

    Yield-to-maturity (YTM) - ?

    Present Value (price of bond) = $956.08

    Future Value (FV) = $1,000

    Payment Coupon (PMT) = $64 (6.4% x $1000)

    Using a Financial calculator, the Yield-to-maturity (YTM)

    = 6.81%
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Home » Business » Footsteps Co. has a bond outstanding with a coupon rate of 6.4 percent and annual payments. The bond currently sells for $956.08, matures in 20 years, and has a par value of $1,000. What is the YTM of the bond? a. 6.81% b. 6.69% c. 6.13% d. 5.67% e.
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