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musickatia [10]
2 years ago
15

Stein Co. issued 15-year bonds two years ago at a coupon rate of 5.4 percent. The bonds make semiannual payments. If these bonds

currently sell for 94 percent of par value, what is the annual YTM
Business
1 answer:
kherson [118]2 years ago
7 0

The annual YTM will be 3.07% if the bonds make semiannual payments and sell for 94 percent of par value.

<u>Given data</u>

Coupon rate (CR) = 5.4%

Current price (B0) = 94%

Assuming maturity value (MV) = 100%

Years to maturity (n) = 15.

<h3>What is the Annual YTM?</h3>

YTM = CR + ((MV − B0)/n) / ((MV + B0)/2)

YTM = 5.4% + (100% - 94%)/15) / (100% + 94%)/2)

YTM = 0.054 + (-0.03866666666) / 0.97

YTM = 0.01533333334 / 0.97

YTM = 0.015333 * 2

YTM = 0.030666

YTM = 3.07%

In conclusion, the annual YTM will be 3.07% if the bonds make semiannual payments and sell for 94 percent of par value.

Read more about  Annual YTM

<em>brainly.com/question/15711043</em>

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Thanks For Sharing.

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  • The sum of the years' digit and units of production are the other two techniques. By deducting the salvage value from the asset's purchase price and either dividing the depreciable amount by the number of years or applying a preset rate to the depreciable amount, the straight-line method is derived.
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<h3>What is double declining balance depreciation method?</h3>
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