Question

A bond has a $1000 par value, 10 years to maturity, and a 7% annual coupon and sells for $985.a. What is the yield to maturity (YTM)

Answer 1

Answer:

the yield to maturity (YTM) is 7.22 %

Explanation:

The yield to maturity (YTM) can be determined as follows :

Pv = - $985

n = 10

Pmt = $1000 × 7 % = $70

P/ yr = 1

Fv = $1000

YTM = ?

Using a Financial Calculator, the yield to maturity YTM is 7.2157 or 7.22 %.