Final answer:
The yield to maturity on a $1,000 bond with a 6% coupon and 8 years to maturity, given the current price of $1,098.94, can be calculated using the steps provided.
Step-by-step explanation:
The yield to maturity on a $1,000 bond with a 6% coupon and 8 years to maturity, given the current price of $1,098.94, can be calculated using the following steps:
- Calculate the annual interest payment by multiplying the coupon rate by the face value of the bond: $1,000 * 6% = $60.
- Calculate the annual yield to maturity by subtracting the current price from the face value and dividing by the current price: ($1,000 - $1,098.94) / $1,098.94 = -9.03%
Therefore, the yield to maturity on this bond is -9.03%.