Consider a corporate bond with a 10.5% coupon rate, paid semi-annually, $1000 par value and a current market price of $887.16. It matures in exactly 20 years. What is the yield to maturity (YTM) on this bond? A. 4% B. 4.5% C. 5% D. 5.5% E. 6% F. 6.5% G. 7% H. 7.5% I. 8% J. 8.5% K. 9% L. 9.5% M. 10% N. 10.5% O. 11% P. 11.5% Q. 12% R. 12.5% S. 13% T. 13.5% U. 14% V. 14.5% W. 15% X. 15.5% Y. 16%
Added by Theresa G.
Step 1
The bond has a 10.5% annual coupon rate, so the semi-annual coupon payment is 10.5%/2 = 5.25% of the $1000 par value, or $52.50. Show more…
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