Question

What is the yield of the following bond if interest​ (coupon) is paid annual​ly? ​(Round to...

What is the yield of the following bond if interest​ (coupon) is paid annual​ly?

​(Round to two decimal​ places.)

Par Value

Coupon Rate

Years to

Maturity

Yield to

Maturity

Price

​$1,000.00

8​%

10

​?%

​$1,000.00

0 0
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Answer #1

Annual coupon=1000*8%=80

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[80+(1000-1000)/10]/(1000+1000)/2

which is equal to

=8%

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