Google issued a bond on 1/1/20X1. The bond has $1,000 face value, a 8% coupon rate, and it matures on 1/1/20X9. Today, 1/2/20X7, the bond is trading at $990 per bond. The remaining contractual cash flows for this bond are as listed below.
Date Cash Flow
7/1/20X7 $40
1/1/20X8 $40
7/1/20X8 $40
1/1/20X9 $40
1/1/20X9 $1,000
What is the Yield to Maturity (YTM) of this bond today?
Hints: Start with your answer from the previous Google bond question. Remember YTM = EAIR.
(Do not round intermediate calculations and do not enter your answer as a percent. Round your answer to 3 decimal places, e.g., 0.315 instead of 31.5%).