A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has
ID: 2765890 • Letter: A
Question
A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until maturity, what is the yield to maturity of the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
(ANSWER IS NOT: 7.41% )****
%
A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until maturity, what is the yield to maturity of the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
YTM = (C + (F - P)/n) / ( F + P) /2 P = 894.17 F = `1000 n = 13 C = 6.2% of 1000 = 62 YTM = (62 + ( 1000 - 894.17)/18))/(1000+894.17)/2 = ( 62 + 105.83/18)/ 947.08 = ( 62 + 5.88)/ 947.08 = 67.88 / 947.08 = 7.17%