Face Value = $1,000
Current Price = $1,050
Annual Coupon Rate = 11%
Semiannual Coupon Rate = 5.50%
Semiannual Coupon = 5.50% * $1,000
Semiannual Coupon = $55
Time to Maturity = 17 years
Semiannual Period = 34
Let semiannual YTM be i%
$1,050 = $55 * PVIFA(i%, 34) + $1,000 * PVIF(i%, 34)
Using financial calculator:
N = 34
PV = -1050
PMT = 55
FV = 1000
I = 5.184%
Semiannual YTM = 5.184%
Annual YTM = 2 * 5.184%
Annual YTM = 10.368% or 10.37%
Thatcher Corporation's bonds will mature in 17 years. The bonds have a face value of $1,000...
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