Answered: Example: Calculate the Yield to… | bartleby

Financial Accounting Intro Concepts Meth/Uses

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 31P

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Please help me understand how to answer the last equation?

Ch 14: Assignment - Investing in Stocks and Bonds
purchased at a discount or at a premium:
Yield to Maturity (YTM)
1
I+ {{FV-CV) / N)
(FV+CV)/ 2
This bond pays $ 75
In this case, the bond was purchased at a discount
where:
in interest per year.
I
FV
CV
N
Example: Calculate the Yield to Maturity (YTM)
Suppose you paid $1,070 for a 20-year bond with a face value of $1,000 and a coupon rate of 7.5%.
hip
-
Interest paid annually in dollars
Using the provided yield to maturity (YTM) formula, the YTM for this bond is
your final answer to two decimal places.)
Face value
Current value
Number of years until maturity
which means that the YTM should be higher
0 x
than the stated coupon rate.
Grade It Now
%. (Note: Do not round intermediate calculations. Round
A-Z
Save & Continue
K
Continue without saving

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