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The bonds issued by the south foot bear a coupon rate of 7.5 percent, payable semiannually. the bonds mature in 6.5 years, sell at par, and have a $1,000 face value. what is the yield to maturity

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  1. Today, 10:15
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    Answer: 7.5%

    Explanation:

    Given the following:

    Coupon rate = 7.5% semi-annually = 0.0375

    Coupon or interest payment per period = $37.5

    Period (n) = 6.5 years * 2 = 13

    Face value (f) = $1000

    Price of bond = face value = $1000

    Semiannual Yield to maturity = [ (((f-p) / n) + C) / (f + p) / 2]

    Semiannual YTM = [ (((1000 - 1000) / 13) + 37.5) / (1000 + 1000) / 2]

    Semiannual Yield to maturity = [ (((0 / 13) + 37.5) / 2000/2]

    = 37.5 / 1000 = 0.0375 = 3.75%

    Yield to maturity = 2 * Semiannual yield to maturity

    Yield to maturity = 2 * 3.75% = 7.5%
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Home » Business » The bonds issued by the south foot bear a coupon rate of 7.5 percent, payable semiannually. the bonds mature in 6.5 years, sell at par, and have a $1,000 face value. what is the yield to maturity
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