Ask Question
BusinessBusiness
26 July, 19:15

A firm issues a bond today with a face value of $1,000, a 6.25% coupon rate, annual coupon payments, and a term of 15 years. An investor purchases the bond for $1,249. What is the yield to maturity?

+2
Answers (1)
  1. 26 July, 20:37
    0
    YTM of the bond is 4.08%

    Explanation:

    Given FV = $1000, Cr = 6.25%, n = 15 years, p = $1249 YTM = ?

    The formula for calculating the YTM

    = C+F-P:n/F+P:2

    Solve C = bond makes annual coupon payments

    6.25*1000=$62.5

    Plug the values in the formula

    62.5+1000-1249:15 / 1000+1249:2

    =0.0408/4.08%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A firm issues a bond today with a face value of $1,000, a 6.25% coupon rate, annual coupon payments, and a term of 15 years. An investor ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Al contracted to sell his house to bev. subsequently, they both changed their minds and agreed to cancel the contract. the contract between al and bev is discharged by:
Answers (1)
The balance sheet of the central bank is Assets Liabilities Gov't bonds $5000 Currency $2100 Gold $500 Reserves of commercial banks $3400 The consolidated balance sheet of commercial banks is Assets Liabilities Reserves at the central bank $3400
Answers (1)
With manual transmission, use your right foot for the brake and accelerator and left foot for the clutch. True or False
Answers (1)
What is the correct Price Rule Setup? Universal Containers wants to apply an additional discount of 15% to the Quote when Payment Frequency is Monthly or Bi-Weekly and Product A is added or User Count greater than 25 is defined. A.
Answers (1)
Sam has just begun to spontaneously apologize to other children if he accidentally hurts them during play time. Sam is most likely years old
Answers (1)
New Questions in Business
An advertiser enables target cost-per-acquisition (cpa) bidding and notices that conversions decrease. what might cause this?
Answers (1)
A trigger strategy is a strategy that: A. is not relevant to oligopolies. B. determines when to enter an industry. C. depends on an opponent's past decisions. D. tells a business to leave the industry because the price is below the AVC.
Answers (1)
What is the effect on the supply curve for skateboards if the government implements a tax on the manufacturing process?
Answers (1)
Cost of goods sold is: an asset account. a revenue account. an expense account. a permanent equity account.
Answers (1)
Markup represents an amount needed to cover operating expenses. a. True b. False
Answers (1)
Home » Business » A firm issues a bond today with a face value of $1,000, a 6.25% coupon rate, annual coupon payments, and a term of 15 years. An investor purchases the bond for $1,249. What is the yield to maturity?
Sign Up Forgot Password?