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Tems11 [23]
3 years ago
13

Dave harris has just purchased a bond with a face value of $1,000 that pays 6 percent. the purchase price of the bond was $900,

and the bond will mature in 5 years. what is the yield to maturity for this bond?
Business
1 answer:
Vilka [71]3 years ago
8 0
The yield of maturity for this bond is "8.4 percent".
We can calculate this in the following way;
<span>Yield to maturity = YTM = {($1,000 x .06) + [($1,000 - 900)/5]}/[($900 + $1,000)/2]
=(60 + 20) / (950)
=80/950
=0.084 
=0.084 x 100
= 8.4 percent</span>
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