A 25-year, $1,000 par value bond has an 8.5% semi-annual coupon. The bond currently sells for...
A 25-year, $1,000 par value bond has an 8.5% semi-annual coupon. The bond currently sells for $875. What is the Yield to Maturity of this 25-year bond?
Homework Answers
Bond Par Value = $1,000
Bond Present Value = $875
Time Period = 25 years
Coupon Rate = 8.50% semi-annually
Calculating Yield to Maturity,
Using TVM Calculation,
I = [FV = 1,000, PV = -875, PMT = 42.50, T = 50]
I = 9.85%
So,
Yield to Maturity = 9.85%
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