Ask Question
22 November, 04:33

Yield to maturity: Rudy Sandberg wants to invest in four-year bonds that are currently priced at $868.43. These bonds have a coupon rate of 6 percent and pay semiannual coupon payments. What is the current market yield on this bond

+3
Answers (1)
  1. 22 November, 07:16
    0
    The answer is 10.08%

    Explanation:

    Yield to maturity is the rate of return a bondholder (investor) is expecting on its bond (investment) from the bond issuer.

    N (Number of years) = 8 years (4x 2)

    I/Y (Yield to Maturity) = ?

    PV (Present Value) = $868.43

    PMT (Payment) = $30 (6% of $1,000 : 2)

    FV (Future value) = $1,000

    Using Financial calculator:

    The yield-to-maturity is 5.04%

    5.04% (semi annual)

    Annual YMT = 5.04% x 2

    =10.08%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Yield to maturity: Rudy Sandberg wants to invest in four-year bonds that are currently priced at $868.43. These bonds have a coupon rate of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers