At Westonci.ca, we provide reliable answers to your questions from a community of experts. Start exploring today! Ask your questions and receive accurate answers from professionals with extensive experience in various fields on our platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.
Sagot :
The yield to maturity on this bond according to the trial-and-error approach is 9.66 percent.
According to the statement
we have given that the Uan zhang bought a 10-year bond that pays 8. 25 percent interest per 6 months.
And we have to find that the yield to maturity on this bond.
So, For this purpose,
The amount given is $911. 10.
Years to maturity = n = 10
Coupon rate = C = 8.25%
Semiannual coupon = $1,000 × (0.0825/2) = $41.25
Yield to maturity = i
Present value of bond = PB = $911.10
Use the trial-and-error approach to solve for YTM. Since the bond is selling at a discount, we know that the yield to maturity is higher than the coupon rate.
Try YTM = 9.4%:
= $522.90 + 391.54 ≅ $914.43
The YTM is approximately 9.66 percent. Using a financial calculator provided an exact YTM of 9.656 percent (2 × 4.828%).
So, The yield to maturity on this bond according to the trial-and-error approach is 9.66 percent.
Learn more about percentage here
https://brainly.com/question/11360390
#SPJ4
We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.
