Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of $1,000 and a current price of $1,295.00. The bonds will mature in 11 years. What is the yield to maturity on the bonds?

a. 10.09%

b. 7.50%

c. 4.53%

d. 3.90%

e. 2.54%

Question

Business

Robert Best

28 December, 21:53

Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of $1,000 and a current price of $1,295.00. The bonds will mature in 11 years. What is the yield to maturity on the bonds?

a. 10.09%

b. 7.50%

c. 4.53%

d. 3.90%

e. 2.54%

+1

Answers (1)

Know the Answer?

Keith Shepard · Answer 1

4.53%

Explanation:

You can solve this using a financial calculator with the following inputs;

Maturity of the bond; N = 11

Face value of the bond = 1,000

Current price of the bond; PV = - 1,295

Annual coupon payment; PMT = coupon rate * face value

PMT = 8% * 1000 = 80

Next, use the above inputs to find the Yield to maturity (YTM) of the bond by computing I/Y;

CPT I/Y = 4.53%

Therefore, YTM = 4.53%

Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of $1,000 and a current price of $1,295.00. The bonds will mature in 11 years. What is the yield to maturity on the bonds?a. 10.09%b. 7.50%c. 4.53%d. 3.90%e. 2.54%

Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of $1,000 and a current price of $1,295.00. The bonds will mature in 11 years. What is the yield to maturity on the bonds?

a. 10.09%

b. 7.50%

c. 4.53%

d. 3.90%

e. 2.54%