Ask Question
25 October, 08:18

Warren Corporation is interested in a three-year, 11% annual coupon bond. A broker quotes a price of $930.35. What is the yield to Maturity?

+4
Answers (1)
  1. 25 October, 08:24
    0
    yield to maturity is equal to 14.00%

    Explanation:

    given,

    time = 3 years

    coupon rate = 11% = 0.11

    price = $930.35

    take par value = $1000 yield to

    current price = 110 * PVAF + 100 * PVF

    $930.35 = 110 * PVAF + 100 * PVF

    using trial and error method

    13% current price = 110 * 2.3612 + 1000 * 0.69305 = $ 952. 782

    14 % current price = 110 * 2.3216 + 1000 * 0.67497 = $ 930. 346

    = $ 930. 35

    hence, correct answer is 14.00%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Warren Corporation is interested in a three-year, 11% annual coupon bond. A broker quotes a price of $930.35. What is the yield to Maturity? ...” 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