What is the yield to maturity of a $1,000 par value bond that is currently selling...

What is the yield to maturity of a $1,000 par value bond that is currently selling for $1,362 if the annual coupon rate is 6.8% and the bond has 14 years to maturity?

Solutions

Expert Solution

Annual coupon=1000*6.8%=$68

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

=[68+(1000-1,362)/14]/(1000+1,362)/2

which is equal to

=3.49%(Approx)

jeff jeffy answered 2 years ago

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