The Painted Pin Co. has 11 percent coupon bonds on the market with nine years left...

The Painted Pin Co. has 11 percent coupon bonds on the market with nine years left to maturity. The bonds make annual payments and have a par value of $1,000.

If the bonds currently sell for $1,139.59, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Yield to Maturity __?___%

Solutions

Expert Solution

Annual coupon=1000*11%=110

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

=[110+(1000-1,139.59)/9]/(1000+1,139.59)/2

which is equal to

=8.70%(Approx)

jeff jeffy answered 2 years ago

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