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Debra King wants to invest in four-year bonds that are currently priced at $898.49. These bonds have a coupon rate of 6.0 percent and make semiannual coupon payments. What is the current market yield on
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Debra King wants to invest in four-year bonds that are currently priced at $898.49. These bonds have a coupon rate of 6.0 percent and make semiannual coupon payments. What is the current market yield on this bond?

User Soo Wei Tan
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1 Answer

3 votes

Answer:

9.08%

Step-by-step explanation:

We use the RATE formula that is shown in the attachment below

Given that,

Present value = $898,.49

Assuming figure - Future value or Face value = $1,000

PMT = 1,000 × 6% ÷ 2 = $30

NPER = 4 years × 2 = 8 years

The formula is shown below:

= Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

Therefore,

After solving this, the yield to maturity is 9.08%

Debra King wants to invest in four-year bonds that are currently priced at $898.49. These-example-1
User Dowomenfart
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