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angela purchased a corporate bond currently selling for $925 in the secondary market. the bond has a coupon rate of 7.75% and matures in 12 years. which of the following is the yield to maturity on this bond? a) 8.49% b) 4.39% c) 8.77% d) 15.50%

Respuesta :

The yield to maturity on this bond is 8.77% at 12 years maturity of  7.75% coupon rate  and  corporate bond of $925.

The yield to maturity on this bond formula is:

Corporate bond, PV = 925

Semiannual coupon payment; PMT = 38.75 (7.75% × 1,000 ÷ 2)

                                                           = 1501.56

FV = 1,000

N = 24 (12 × 2)

Solve for I/YR = 4.387 × 2

                       = 8.77%

the yield to maturity on this Corporate bond is 8.77%.

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