Answer:
4.42% semiannually OR 8.84% annually
Explanation:
The actual return that an investor earn on a bond until its maturity is called the Yield to maturity. It is a long term return which is expressed in annual rate.
According to given data
Assuming the Face value of the Bond is $1,000
Coupon Payment = C = $1,000 x 9.4% = $94 annually = $47 semiannually
Price of the Bond = P = $1,000 x 105% = $1,050
Numbers of period = n = 15 years x 2 = 30 periods
Use Following Formula to calculate YTM
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $47 + ( $1,000 - $1,050 ) / 30 ] / [ ($1,000 + $1,050 ) / 2 ]
Yield to maturity = $45.33 / $1,025 = 0.0442
Yield to maturity = 4.42% semiannually OR 8.84% annually
