Asked by Zaylah Harris on May 10, 2024
Verified
An investor bought a 6 ¾% bond at 74. The bond would mature in 13 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)
Yield To Maturity
The total return anticipated on a bond if the bond is held until it matures, taking into account its current market price, par value, coupon interest rate, and time to maturity.
6 ¾% Bond
A bond that pays an annual interest rate of 6.75% to its holder, typically issued by governments or corporations.
- Derive the yield to maturity (YTM) of a bond by considering the price paid, the interest rate it offers, and how long until it reaches its maturity date.
Verified Answer
DK
Learning Objectives
- Derive the yield to maturity (YTM) of a bond by considering the price paid, the interest rate it offers, and how long until it reaches its maturity date.