Ask Question
31 May, 04:37

Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.7 percent. The bond sells for $962.62 and matures in 13 years. The par value is $1,000. What is the YTM of the bond

+4
Answers (1)
  1. 31 May, 05:04
    0
    Answer: 0.06101 = 6.101%

    The yield to maturity of the bond is

    6.101%

    Explanation:

    Using YTM formula below

    YTM = C + (fv - pv) / n : (fv + pv) / 2

    C = coupon rate = 5.7% of par value

    5.7/100 * 1000

    = $57

    pv = price value = $962.62

    Fv = face value / par value = $1000

    n = number of years to maturity = 13

    Using above formula

    C + (fv - pv) / n =

    57 + (1000 - 962.62) / 13

    57 + (37.38) / 13 = 59.8753846

    (fv + pv) / 2 =

    (1000 + 962.62) / 2

    = 1962.62 / 2 = 981.31

    YTM = C + (fv - pv) / n : (fv + pv) / 2

    YTM = 59.8753846 / 981.31

    YTM = 0.06101

    (to percentage) = 6.101%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.7 percent. The bond sells for $962.62 and ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers