Gertrude Corp bonds have a 11% annual coupon, 7 years left until maturity, and they are currently selling for $1250. What is the yield to maturity of Gertrude’s bonds?
13.38% |
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None of these |
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6.45% |
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12.97% |
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6.00% |
annual coupon=1000*11%=110
Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2
=[110+(1000-1250)/7]/(1000+1250)/2
which is equal to
=6.45%(Approx).
Gertrude Corp bonds have a 11% annual coupon, 7 years left until maturity, and they are currently selling for $1250. Wha...
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