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Sholpan [36]
1 year ago
11

A bond has a $1,000 par value, 20 years to maturity, and a 5 nnual coupon and sells for $860. What is its yield to maturity (ytm

)? round your answer to two decimal places
Business
1 answer:
o-na [289]1 year ago
8 0

Its annual compound yield to maturity (YTM)  is $881.00

An annual compound hobby is calculated by multiplying the initial main amount by one plus the once-a-year hobby fee raised to the wide variety of compound durations minus one. A hobby may be compounded on any given frequency agenda, from continuous to every day to annually.

"12% hobby" approach that the hobby fee is 12% in keeping with year, compounded annually. "12% interest annual compound monthly" manner that the hobby charge is 12% in line with the year (no longer 12% consistent with month), compounded month-to-month. Consequently, the hobby price is 1% (12% / 12) in line with the month.

A compound hobby is the addition of a hobby to the principal sum of a mortgage or deposit, or in other phrases, interest on essential plus interest.

First, find YTM

N = 20

I = YTM

PV = -860

PMT = 50

FV = 1000

YTM = 6.245%

The price after 5 years is nothing but the future value of the bond after 5 years

N = 5

I = YTM = 6.245

PV = -860

PMT = 50

FV = $881

So the answer is $881.00

Learn more about annual compound here brainly.com/question/24274034

#SPJ4

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6 0
2 years ago
Which of the following statements is true if a​ bond's stated interest rate is higher than the market​ rate?
Feliz [49]

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5 0
3 years ago
______________ produce fundamental changes that can transform a company or even revolutionize an industry, while ______________
Whitepunk [10]

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Such small changes however occur in large volumes and can easily revolutionize any industry.

3 0
3 years ago
When John first starts his job, he rides the bus wherever he goes. However, after one year, John receives a promotion and a pay
vekshin1

Answer:

c. Inferior

Explanation:

Based on the information provided it can be said that this behavior would indicate that to John, a bus ride is an inferior good. This term by definition is a good whose demand decreases when consumer's income rises. Since John received an increased salary with his promotion, he is now able to afford to be able to drive instead of taking the bus. Therefore his demand for taking the bus has drastically decreased.

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Answer:

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Explanation:

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4 0
3 years ago
Read 2 more answers
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