Answered

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What is the yield to maturity for a bond paying $100 annually that has 6 years until maturity and sells for $1,000

Sagot :

Zviko

Answer:

10%

Explanation:

The yield to maturity (YTM) of the Bond is interest rate that will make the Present Value of the Cash Flow equal to the Initial Investment.

Assuming the Selling Price and the Maturity amount of $1,000 applies, the yield to maturity will be calculated as follows :

FV = $1,000

PMT = $100

N = 6

PV = $1,000

P/YR = 1

YTM = ?

Using a financial calculator to calculate this value as above, we get 10%

The yield to maturity for the Bond is 10%

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