A three year bond has par value of $1000, coupon rate of 6% which is paid semiannually, and a price of $985. What is its yield to maturity as a percentage rounded to the nearest thousandth (.001)? (remember to annualize your answer).

A three year bond has par value of $1000, coupon rate of 6% which is paid semiannually, and a price of $985. What is its yield to maturity as a percentage rounded to the nearest thousandth (.001)? (remember to annualize your answer).

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4MC

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

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A three year bond has par value of $1000, coupon rate of 6% which is paid semiannually, and a price of $985. What is its yield to
maturity as a percentage rounded to the nearest thousandth (.001)? (remember to annualize your answer).

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