What is the yield to maturity on a bond that has a price of $2,824 and...

What is the yield to maturity on a bond that has a price of $2,824 and pays $107 annually forever?

Please round your answer to the fourth decimal. E.g. 0.1234

Solutions

Expert Solution

Answer - YTM = 3.7890%

EXPLAINATION -

YTM of a perpetual bond = (Coupon Rate ÷ Price) * 100

YTM = ($107 ÷ $2824) * 100

YTM = 0.03788951841 * 100

YTM = 3.788951841 or 3.7890% ( rounded off )

jeff jeffy answered 2 years ago

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