Question

an annual bond selld for $865 with par value $1,000 and coupoin rate 8% what is bond yeild to maturity for 10 years

Answer 1

1.4484 %

Step-by-step explanation:

The formula for Yield to Maturity =

[C + (FP - MP) /n]/FP + MP/2

Where

C = Coupon rate = 8% = 0.08

MP = Market value or price = $865

FP = Face or Par value = $1000

n = number of years = 10

Yield to Maturity =[ 0.08 +(1000 - 865) /10]/ 1000 + 865/2

Yield to Maturity = 1.4484 %