XYZ Corp issued $600,000 of 9% , 10-year bonds on June 30,2020, for $562,500. This price provided a yield of 10% on the bonds. I
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Answer:
The correct answer to the following question will be "8%".
Explanation:
The given values are:
Number of years of maturity = 5 years
Interest rate of coupon = 10%
= 10%×1000
= 100
Yield to maturity, YTM = 8%
As we know,
Price of Bond = PV of Coupons + PV of Per Value
On putting the values in the above formula, we get
⇒ =
⇒ =
After 1 years, we get
Price of Bond = PV of Coupons + PV of Per Value
On putting the values in the above formula, we get
⇒ =
⇒ =
Now,
The total return rate =
=
=