What is the yield to maturity (rounded to the nearest whole percent) of a 20 year, $100 par value bond, that pays a 10% coupon s
1 answer:
Answer:
the yield to maturity is 12%
Explanation:
The computation of the yield to maturity is as follows
Given that
Future value is $100
Present value is $85
PMT = $100 × 10% ÷ 2 = $5
NPER = 20 × 2 = 40
The formula is given below:
= RATE(NPER;PMT;-PV;FV;TYPE)
The present value comes in positive
After applying the above formula, the yield to maturity is
= 6% × 2
= 12%
Hence, the yield to maturity is 12%
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