In: Finance
I have another bond worth $1,247.23. The bond have a face value of $1,000,a coupon rate of 5%, with coupon annually, and it will mature in
25 years. What will the yield to maturity of the bond be?
Yield to maturity (YTM) of the Bond
Variables |
Financial Calculator Keys |
Figure |
Par Value/Face Value of the Bond [$1,000] |
FV |
1,000 |
Coupon Amount [$1,000 x 5.00%] |
PMT |
50 |
Market Interest Rate or Yield to maturity on the Bond |
1/Y |
? |
Maturity Period/Time to Maturity [25 Years] |
N |
25 |
Bond Price/Current Market Price of the Bond [-$1,247.23] |
PV |
-1,247.23 |
We need to set the above figures into the financial calculator to find out the Yield to Maturity of the Bond. After entering the above keys in the financial calculator, we get the annual yield to maturity on the bond (1/Y) = 3.50%.
“Hence, the Yield to maturity (YTM) of the Bond will be 3.50%”