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Scott turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. what is the yield-to-maturity on this bond?
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Mar 11, 2019
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Scott turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. what is the yield-to-maturity on this bond?
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Zanyar Jalal
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The yield to maturity, YTM, is the total return you could get from the bond if you keep the bond until it matures.
To solve:
Yield to maturity = {($1,000 x 0.08) + [($1,000 - $800/10]}/[($800 + $1,000)/2]
Yield to maturity = 11.11%
Max Macfarlane
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Mar 16, 2019
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Max Macfarlane
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