Homework Answers
Answer:
Face Value = $1,000
Current Price = $900
Annual Coupon Rate = 7.375 %
Annual Coupon = 7.375% * $1,000 = $73.75
Time to Maturity = 32 years
Let Annual YTM be i%
$900 = $73.75 * PVIFA(i%, 32) + $1,000 * PVIF(i%, 32)
Using financial calculator:
N = 32
PV = -900
PMT = 73.75
FV = 1000
I = 8.27%
Annual YTM = 8.27%
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