What is the yield to maturity of a consol with a coupon of $85 and a...

Question

Question

What is the yield to maturity of a consol with a coupon of $85 and a price of $1,000?

A) 5.56% B) 8.50% C) 9.00% D) Not enough information has been provided to determine the answer.

Answer 1

Answer #1

In order to calculate the Yield To Maturity, four components are needed.

1. Coupon payment

2. Price of the bond

3. Face value of bond

4.Years to maturity

In the given case,

Only coupon payment and price is provided.

There is no information regarding the face value of bond and the years to maturity.

So,

The answer cannot be determined in absence of certain important information.

Hence, the correct answer is the option (D).

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Answer 2

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