Springfield Nuclear Energy Inc. bonds are currently trading at $1,000.00. The bonds have a face value...
Springfield Nuclear Energy Inc. bonds are currently trading at $1,000.00. The bonds have a face value of $ 1,000, a coupon rate of 5 % with coupons paid annually, and they mature in 10 years. What is the yield to maturity of the bonds?
The yield to maturity of the bonds is ____
(Round to two decimal places.)
Homework Answers
Given that the face value of bond is $1000 and the bond is
currently trading at $1000, so the bond is trading at par.
When yield to maturity=Coupon rate, a bond will trade
at par (or face value)
When yield to maturity<Coupon rate, a bond will trade at a
premium
When yield to maturity>Coupon rate, a bond will trade at a
discount
Hence, yield to maturity of the bonds is equal to coupon rate, that is 5.00%
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