BWA corp has 5.8% annual coupon bonds outstanding with 15 years left until maturity. The bonds...
BWA corp has 5.8% annual coupon bonds outstanding with 15 years left until maturity. The bonds have a face value of $1,000 and their current market price (PV) is $819.14. What is the YTM on BWA's bonds?
Group of answer choices
9.40%
6.00%
7.61%
7.90%
8.36%
Homework Answers
Annual coupon=1000*5.8%=58
Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2
=[58+(1000-819.14)/15]/(1000+819.14)/2
=7.90%(Approx).
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