Answer:
The yield to maturity of this bond is 6.55%
Explanation:
Yield to maturity is the rate of expected return on a bond which is held until the maturity. It is considered as a long term return and expressed in annual terms.
According to given data
Coupon payment = C = 100,000 x 5.7% = $5,700
Face value = F = 100,000
Price = P = 100,000 x 90% = 90,000
Number of year to mature = 19
Use following formula yo calculate YTM
Yield to maturity = [ C + ( F-P)/n ] / [ (F+P)/2 ]
Yield to maturity = [ $5,700 + (100,000-90,000)/19 ] / [ (100,000+90,000)/2 ]
Yield to maturity = 6,226.32 / 95,000 = 0.0655 = 6.55%
