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Marizza181 [45]
3 years ago
7

New Markets has $1,000 face value bonds outstanding that pay interest SEMIANNUALLY, mature in 16 years, and have a 4 percent cou

pon. The current price is quoted at 93.546. What is the yield to maturity?
Business
1 answer:
eimsori [14]3 years ago
5 0

Answer:

4.58%

Explanation:

Using the financial calculator as shown below , we can determine the yield to maturity which is the  discount  rate used in discounting bond's future cash flows to present:

N=32 (number of semiannual coupons in 16 years=16*2=32)

PMT=semiannual coupon=$1000*4%*6/12=$20

PV=-935.46(93.546%*$1000=$935.46 )

FV=1000 (face value)

lastly enter I/Y=2.29% (semiannual yield to maturity)

annual yield to maturity=2.29% *2=4.58%

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Term loans are credit facilities where the lender and borrower agree on the loan amount and a repayment schedule. It involves a large sum of money to be repaid over a long period making it ideal for acquiring capital.

Mortgage loans are long term debts used to finance the purchase of properties. It is ideal for expensive capital due to the lengthy time it takes to repay.

Bonds are long-term debt securities issued by corporations to finance long term projects.

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i hope it helps :)

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