Final answer:
To calculate the yield to maturity of a bond, use the formula for present value of a bond and solve for r. In this case, the bond's yield to maturity is 0 or 0%.
Step-by-step explanation:
To calculate the yield to maturity of a bond, we need to use the formula for present value of a bond:
PV = C/(1+r)^1 + C/(1+r)^2 + ... + C/(1+r)^n + F/(1+r)^n
Where PV is the current price of the bond, C is the annual coupon payment, r is the yield to maturity, n is the number of years until maturity, and F is the face value of the bond. In this case, we know all of the values except r, so we can rearrange the formula and solve for r:
r = (C/F) x [1 - (PV/F)^(1/n)]
Substituting the given values, we have r = (80/1000) x [1 - (1000/1000)^(1/15)] = 0.08 x (1 - 1) = 0.08 x 0 = 0
Therefore, the bond's yield to maturity is 0 or 0%.