N&N Company has 5% coupon bonds on the market with 25 years left to maturity. The...

N&N Company has 5% coupon bonds on the market with 25 years left to maturity. The bonds make annual payments. If the bond currently sells for $1030, what is its YTM?

Expert Solution

Annual coupon=1000*5%=50

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[50+(1000-1030)/25]/(1000+1030)/2

which is equal to

=4.79%(Approx)

jeff jeffy answered 2 years ago

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