Answered: stevens copr bonds has an annual…

stevens copr bonds has an annual coupond payment of 7.25%. The bonds have a par value of $1000 and a current price of $1,125, and they will mature in 13 years. What is the yield to maturity?

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 2P

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Question

stevens copr bonds has an annual coupond payment of 7.25%. The bonds have a par value of $1000 and a current price of $1,125, and they will mature in 13 years. What is the yield to maturity?

Expert Solution

Step 1

Coupon rate = 7.25%

Coupon amount (PMT)= 7.25% *1000= 72.50

Current price(PV) = 1125

Face value = 1000

Maturity years (NPER)=13 Years

Step 2

	S	T
43	Yield to maturity	13
44	Current Value	1125
45	Face value	1000
46	coupon amount (face value* coupon rate) =7.25%*1000	72.5
47
48	Rate	5.85%

YIELD TO MATURITY = 5.85%

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