Question

bonds currently sell for $1,120. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?

Answer 1

Yield to maturity 7. 26 percentage

Step-by-step explanation:

Yield to maturity is given as

`Yield\ to\ maturity =([Annual\ coupon+((Face\ value - Present\ value))/(time\ to\ maturity))/(((Face\ value+Present\ value))/(2))`

annual coupon = $85

face value = $1000

present value = $1120

maturity period =15 year

putting all value to get yield to maturity value

=[85+(1000-1120)/15]/[(1000+1120)/2]

=7. 26%.