klongstreet4650 klongstreet4650

04-04-2018
Business

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Scott turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. what is the yield-to-maturity on this bond?

Respuesta :

MrsTriplet MrsTriplet

14-04-2018

The yield to maturity, YTM, is the total return you could get from the bond if you keep the bond until it matures.

To solve:
Yield to maturity = {($1,000 x 0.08) + [($1,000 - $800/10]}/[($800 + $1,000)/2]
Yield to maturity = 11.11%

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