Adams enterprises' noncallable bonds currently sell for $1,120. they have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. what is their yield to maturity

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Business

Jace Blackburn

12 June, 20:39

Adams enterprises' noncallable bonds currently sell for $1,120. they have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. what is their yield to maturity

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Roger Burke · Answer 1

Their yield to maturity is 7.17% based on the information from the question above. This problem can be solved by using the yield to maturity formula which stated as YTM = C + ((F-P) / n) / ((F+P) / 2) where YTM is the yield to maturity, C is the annual coupon, F is the par value, p is the current bond price, and n is the maturity year. Calculation: 7.17% = 85 + ((1000-1120) / 15) / ((1000+1120) / 2)