Company H holds have the face worth of $1000. The holds lift an 8 percent coupon, compensate seductiveness semi-annually as well as grown up in 6 years. Currently the down payment is being traded during 103.21 percent of par. What is the produce to majority (ytm) of the bond?
WHAT IS THE YTM OF THE BOND?
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Face Value of 1,000 = Future Value of 1,000
Periods, N = 12 (6 years, semi annual)
Coupon, PMT = 40 (80 per year, semi annually)
Present Value, PV = -1032.1
I = YTM = 3.66%, semi annually. Multiply by 2
YTM = 7.32%
Conceptually, this makes sense. Since the bond is a premium, its yield to maturity would be less than its coupon rate. (8%)