Question

Caribbean Reef Software has 8.4 percent coupon bonds on the market with 9 years to maturity. The bonds make semiannual payments and currently sell for 95.5 percent of par. What is the YTM

Answer 1

Answer:

9.14%

Explanation:

Calculation for YTM

First step is to use financial calculator to find the I which represent Interest rate

FV = 1,000

PMT= 1,000*8.4%/2= 42

N= 9years*2= 18

PV= -955

Hence,

I= 4.57%

Now let calculate YTM

YTM = 4.57%*2

YTM =9.14%

Therefore YTM will be 9.14%