Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years.

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years. The bonds currently sell for $1,230.51 in the market. What is the bond Yield-to-Maturity (YTM) ?

Expert Solution

Using a financial calculator

PV = 1230.51

PMT = 105 (21%/2 = 10.5% semi-annual coupon on face value $1000)

N = 48 (24 years*2 coupons per year = 48 periods)

FV = 1000

cpt I/Y, we get I/Y= 8.50

Hence, the YTM = 2*8.5% = 17.00%

jeff jeffy answered 2 years ago

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Question

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years.

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