Question

Harrimon Industries bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. What is the yield to maturity at a current market price of ..

Answer 1

To calculate the yield to maturity of a bond, use the formula YTM = (Coupon Payment + ((Face Value - Current Market Price)/Number of Years))/((Face Value + Current Market Price)/2).

Step-by-step explanation:

The calculation of the yield to maturity on Harrimon Industries bonds, with a coupon rate of 9% and 6 years until maturity, requires considering the series of annual interest payments and the lump sum principal repayment at the end of the bond's life. The yield to maturity of a bond can be calculated using the formula:

YTM = (Coupon Payment + ((Face Value - Current Market Price)/Number of Years))/((Face Value + Current Market Price)/2)

In this case, the bond has a coupon rate of 9%, a face value of $1,000, and 6 years left until maturity. To calculate the yield to maturity, you will need the current market price of the bond. Once you have that information, you can plug it into the formula to find the yield to maturity.