Discover the best answers at Westonci.ca, where experts share their insights and knowledge with you. Experience the ease of finding accurate answers to your questions from a knowledgeable community of professionals. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.
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
Thanks for stopping by. We are committed to providing the best answers for all your questions. See you again soon. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.
