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juin [17]
3 years ago
6

West Corp. issued 14-year bonds 2 years ago at a coupon rate of 9.8 percent. The bonds make semiannual payments. If these bonds

currently sell for 103 percent of par value, what is the YTM?
Business
1 answer:
pickupchik [31]3 years ago
3 0

Answer:

the YTM is 9.38 %.

Explanation:

Bond Prices in most countries is expressed per $100. We shall use this as the Price for the bond in question.

Then the Yield to Maturity (YTM), r of the Bond can be determined as follows

Pv = - $103

pmt = ($100 × 9.80) ÷ 2 = $4.90

p/yr = 2

n = (14 - 2) × 2 = 24

Fv = $100

r = ?

Using a Financial Calculator,  the Yield to Maturity (YTM), r is 9.38 %

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