You own a bond that pays $62 in interest annually. The face value is $1,000 and the current market price is $1,034.14. The bond
matures in 10 years. What is the yield to maturity
1 answer:
Given that, the yield to maturity is
YTM= (C + (F-P)/n) / ((F+P)/2)
Where,
C= coupon interest or payment=$62
F= face value=$1000
P=price= $1034.14
n= year's to maturity =10years
Then, applying the formulae
YTM= (C + (F-P)/n) / ((F+P)/2)
YTM= (62 + (1000-1034.14)/10) / ((1000+1034.14)/2)
YTM= (62 + (-34.14)/10) / ((2034.14)/2)
YTM= (62 + - 3.414) /1017.07
+×-=-
YTM= (62 + - 3.414) /1017.07
YTM=58.586/1017.07
YTM=0.0576
Then, the percentage is
YTM=0.0576×100
YTM=5.76%
The yield to maturity is 5.76%
You might be interested in
Answer:
Step-by-step explanation:
The function that we have to study in this problem is
The domain of a function is defined as the set of all the possible values of x that the function can take.
For a square-root function, there are some limitations to the possible value of the argument in the root.
In particular, the argument of a square root must be equal or greater than zero, because the square root of a negative number is not defined.
Therefore, in this case, we have to set the following condition for the domain:
And by solving, we get
which means that the domain of this function is all real numbers equal or greater than 5.