Question
In: Finance
A $1,000 par value 14-year bond with a 10 percent coupon rate recently sold for $965....
A $1,000 par value 14-year bond with a 10 percent coupon rate
recently sold for $965. The yield to maturity is
- A. 10.49%.
- B. 10.00%.
- C. 8.87%.
- D. 6.50%.
Solutions
Expert Solution
Annual coupon=1000*10%=100
Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2
=[100+(1000-965)/14]/(1000+965)/2
which is equal to
=10.49%(Approx)
jeff jeffy answered 2 years agoRelated Solutions
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