Asked by Kevin Oxrider on Jun 25, 2024
Verified
A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and is selling today at an $84.52 discount from par value. The yield to maturity on this bond is ________.
A) 6%
B) 7.23%
C) 8.12%
D) 9.45%
Coupon Bond
A debt security that pays the bondholder a fixed interest rate (coupon) periodically until the bond's maturity date, at which point the principal amount is repaid.
Yield To Maturity
The total return anticipated on a bond if the bond is held until it matures, considering both interest payments and the principal appreciation or depreciation.
Par Value
The face value of a bond or stock, as stated by the issuing company. This is the nominal value and may differ from the market value.
- Quantify the yield to maturity and realize its importance.
Verified Answer
Learning Objectives
- Quantify the yield to maturity and realize its importance.
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