What is the yield to maturity of a nineminusyear bond that pays a coupon rate of 20% per year, has a $1,000 par value, and i
s currently priced at $1,407? Assume annual coupon payments.
1 answer:
Answer:
12.28%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,407
Future value or Face value = $1,000
PMT = $1,000 × 20% = $200
NPER = 9 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the answer would be 12.28%
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