Question

in 1998 fischer corp issued bonds with an 8 percent coupon rate and a 1000 face value. the bonds mature on marc 1, 2023. if an investor purchased one of these bonds on march 1, 2008. determine the yield to maturity if the invesot paid 1050 for the bond

Answer 1

approximate YTM = 7.48%

Step-by-step explanation:

the approximate yield to maturity = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]

approximate YTM = {$80 + [($1,000 - $1,050)/15]} / [($1,000 + $1,050)/2]

approximate YTM = ($80 - $3.33) / $1,025

approximate YTM = $76.67 / $1,025

approximate YTM = 0.0748 ≈ 7.48%