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3 July, 22:31

ABC Company bonds are trading on the open market. These bonds mature in 10 years. The coupon rate on the ABC bonds are at 8.50%. The current price of the bonds is $1,062.50. What is the current yield to maturity of these bond

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  1. 4 July, 01:54
    0
    7.59%

    Explanation:

    Using a financial calculator, input the following to calculate Yield to Maturity (YTM). I'm using Texas Instruments BA II Plus model.

    Face value of the bond; FV = 1000

    Annual coupon payment; PMT = Coupon rate * Face value;

    PMT = 8.5%*1000 = 85

    Present value of bond or price; PV = - 1062.50

    Time to maturity in years; N = 10

    then compute annual interest rate; CPT I/Y = 7.59%
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Home » Business » ABC Company bonds are trading on the open market. These bonds mature in 10 years. The coupon rate on the ABC bonds are at 8.50%. The current price of the bonds is $1,062.50. What is the current yield to maturity of these bond
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