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vesna_86 [32]
3 years ago
5

The Timberlake-Jackson Wardrobe Co. has 11.9 percent coupon bonds on the market with seven years left to maturity. The bonds mak

e annual payments and have a par value of $1,000. If the bonds currently sell for $1,113.46, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Yield to maturity
Business
1 answer:
Stella [2.4K]3 years ago
6 0

Answer:

23%

Explanation:

To find the answer, we need to use the Yield to Maturity Formula:

YTM = C + \frac{(F - P)  }{n} / \frac{F + P}{2}

Where:

  • C = Coupon value (In this case  1,000 x 11.9% = 119)
  • F = Par value
  • P = Market Price
  • n = Years to Maturity

Now, we plug the amounts into the formula and solve:

YTM = 119 + \frac{1,000 - 1,113.46  }{7} / \frac{1,000 + 1,113.46}{2}

YTM = 0.23

YTM = 23%

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The form of illegitimate business that is being practiced by this arrested group of mafia leaders is known as a Ponzi scheme.

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The correct answer is letter "A": the principal wants the agent to act on her own behalf.

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