In: Finance
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 __?___%
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)