Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.5 percent. The bond sells for $
955.25 and matures in 19 years. The par value is $1,000. What is the YTM of the bond
1 answer:
Answer:
5.89%
Explanation:
The computation of the yield to maturity could be find out by determining by applying the RATE formula i.e. to be shown in the attachment
Provided that,
Present value = $955.25
Future value or Face value = $1,000
PMT = 1,000 × 5.5% ÷ 2 = $27.50
NPER = 19 years × 2 = 38 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula , the YTM is
= 2.9473% × 2
= 5.89%
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