3) A $1,060 face value bond is selling in the market place for $927. It matures...
3) A $1,060 face value bond is selling in the market place for $927. It matures in 3 years. If keep to maturity, what is the bond's yield to maturity? (Round to the nearest thousands and convert to a percentage).
Homework Answers
Market price = Face value / (1+r)n
Market price = 927
Face value = 1060
r = yield to maturity
n = 3
927 = 1060/(1+r)3
(1+r)3=(1060/927)
(1+r) = (1060/927)(1/3)
1+r = 1.046
r = 0.046
r = 4.6%
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