Asked by Shani Montes Victorio on May 09, 2024
Verified
An investor bought a 9% bond at 88. The bond would mature in 6 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)
Yield to Maturity
The total return expected on a bond if it is held until its maturity date.
Bonds
Fixed-income investments where an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.
Commission
A fee paid to an agent or employee for transacting a piece of business or performing a service, typically a percentage of the money received from the transaction.
- Comprehend the principle and computation of yield to maturity in bonds.
- Utilize mathematical competencies in finance to compute bond yields.
- Examine the correlation among bond prices, interest rates, and the duration until maturity.
Verified Answer
YP
Learning Objectives
- Comprehend the principle and computation of yield to maturity in bonds.
- Utilize mathematical competencies in finance to compute bond yields.
- Examine the correlation among bond prices, interest rates, and the duration until maturity.