Effective yield to maturity is 8.00%
As, we know.
Data provided in the question:
Selling price of the bond i.e current value = $270
Future value = $1,850
Maturity time, t = 25 years
Now,
Effective yield to maturity, r =<u> ( Future Value )</u> ¹⁻т -`1
Current Value
on substituting the respective values, we get
⇒ Effective yield to maturity, r = <u>($1.850)</u> 1/25 -1
$270
⇒ Effective yield to maturity, r = 1.0800 - 1
or
Effective yield to maturity = 0.0800
⇒ 0.0800 × 100% = 8.00%
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