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avanturin [10]
4 years ago
13

West Corp. issued 10-year bonds two years ago at a coupon rate of 8.1 percent. The bonds make semiannual payments. If these bond

s currently sell for 102 percent of par value, what is the YTM?
Business
1 answer:
REY [17]4 years ago
8 0

Answer:

Yield To Maturity is 7.82% per year and 3.9% per 6 months

Explanation:

Assuming Coupon value is $100

C = Coupon Payment = 100 x 8.1%/ = $8.1

F = Face Value = $100

P = Price = $102

n = number of years = 10

Yield To Maturity = ( C + ( F - P )/n ) / ( ( F + P ) / 2 )

Yield To Maturity = ( $8.1 + ( $100 - $102 )/10 ) / ( ( $100 + 102 ) / 2 )

Yield To Maturity = $7.9 / $101

Yield To Maturity = 7.82%

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