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kvv77 [185]
3 years ago
12

bonds currently sell for $1,120. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their

yield to maturity?
Business
1 answer:
harkovskaia [24]3 years ago
6 0

Answer:

Yield to maturity 7. 26 percentage

Explanation:

Yield to maturity is given as

Yield\ to\ maturity =\frac{[Annual\ coupon+\frac{(Face\ value - Present\ value)}{time\ to\ maturity}}{\frac{(Face\ value+Present\ value)}{2}}

annual coupon = $85

face value = $1000

present value = $1120

maturity period =15 year

putting all value to get yield to maturity value

=[85+(1000-1120)/15]/[(1000+1120)/2]

=7. 26%.

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