Springfield nuclear energy inc bonds are currently trading at 283.30. The bonds have a face value of $1,000, a coupon rate of 2%
with coupons paid annually, and they mature in 20 years. What is the yield to maturity of the bonds?
1 answer:
<u>Answer:</u>
The yield to maturity of the bonds is 11%
<u>Explanation:</u>
Price at which the bonds is currently trading = 283.30$
Face Value = $1000
Coupon rate = 2%
Hence the coupon bond rate = $1000 ×2%
= 
=$20
Years to maturity: 20 years
Formula used:
=
Where C is the bond coupon rate
F is the face value
P is the price
N is the number of years
=
=11%
The yield to maturity of the bonds is 11%
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