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Mathematics
03.07.2021 07:23
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Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a

Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.7 percent. The bond sells for $961.87 and matures in 21 years. The par value is $1,000. What is the YTM of the bond?
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marandahuber
marandahuber
4,5(30 marks)

the  the YTM of the bond is 6%

Step-by-step explanation:

Given:

Coupon rate of 5.7 percent => Coupon payment = 5.7%*1000 = 57 Par value is $1,000 (F) n =21 years Price of bond: $961.87 (P)

As we know that, the formula to find out YTM is:

       YTM = [C + (F-P/n) ] / (F+ P) / 2

<=> YTM =  [ 57 + (1000 - \frac{961.87}{21} )] / (1000 + 961.87)/2

<=> YTM = (57 + 1.87 ) / 980.935

<=> YTM = 0.06* 100% = 6%

So the  the YTM of the bond is 6%

jordanbb9482
jordanbb9482
4,8(55 marks)

it is a. hope this helps.

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