Asked by Daniel Carrera Chavarria on May 14, 2024
Verified
An investor bought an 8% bond at 106. The bond would mature in 5 years. Compute the rate of yield to maturity. (Do not consider commission. Round answer to two decimal places.)
Yield To Maturity
Yield to maturity is the total return anticipated on a bond if the bond is held until it matures, considering all interest payments and the principal repayment.
8% Bond
A bond that pays an annual interest rate of 8% to its holders.
- Calculate the maturity yield for a bond, incorporating its cost at purchase, the rate of interest it pays annually, and its time to expiration.
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Learning Objectives
- Calculate the maturity yield for a bond, incorporating its cost at purchase, the rate of interest it pays annually, and its time to expiration.