Question

Yield to maturity Radoski Corporation's bonds make an annual coupon interest payment of 7.35%.The bonds have a par value of $1,000, a current price of $1,130, and mature in 12 years. What is the yield to maturity on these bonds?a. 5.52%b. 5.82%c. 6.11%d. 6.41%e. 6.73%

Answer 1

Answer:

b. 5.82%

Explanation:

In this case,  you are asked to find the I/Y or the YTM. Using a financial calculator, enter the following inputs;

Maturity of the bond ; N = 12

Face value ; FV = 1,000

Coupon payment ; PMT = 7.35%*1000 = 73.5

Price of the bond; PV = $1,130

Next, compute the YTM;

CPT I/Y = 5.815

Therefore, the YTM is 5.82%