Answer:
The answer is 4.232%
Explanation:
The formula for determining the price of a bond which can also be used to find Yield-to-Maturity(YTM) is:
PV = PMT/(1+r)^1 + PMT/(1+r)^2 .......PMT/(1+r)^1 PMT + FV/(1+r)^n
We are to calculate Yield-to-Maturity(YTM) which is the rate of return on the bond to an investor.
Using a Financial calculator. Input the following:
N = (18 years - 2years) x 2 = 32
1/Y = ?
PV = 109
PMT = 9.5/2 = 4.75
FV = 100
1/Y = 4.232%
