Yield to maturity Radoski Corporation's bonds make an annual coupon interest payment of 7.35%. The bonds have a par value of $1,000, a current price of $1,130, and mature in 12 years. What is the yield to maturity on these bonds? a. 5.52%b. 5.82%c. 6.11%d. 6.41%e. 6.73%

Question

Business

Harper Perry

31 October, 03:51

Yield to maturity Radoski Corporation's bonds make an annual coupon interest payment of 7.35%. The bonds have a par value of $1,000, a current price of $1,130, and mature in 12 years. What is the yield to maturity on these bonds? a. 5.52%b. 5.82%c. 6.11%d. 6.41%e. 6.73%

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Gaven Dunlap · Answer 1

b. 5.82%

Explanation:

In this case, you are asked to find the I/Y or the YTM. Using a financial calculator, enter the following inputs;

Maturity of the bond; N = 12

Face value; FV = 1,000

Coupon payment; PMT = 7.35%*1000 = 73.5

Price of the bond; PV = $1,130

Next, compute the YTM;

CPT I/Y = 5.815

Therefore, the YTM is 5.82%