What is the Yield to Maturity (YTM )for a $1,000 par value bond selling on the market priced at $1,120 that matures in 6 years and has the annual coupons rate at 12%? Select one: a. 8.5 % b. 9.4 % c. 12.% d. 13.2 %

What is the Yield to Maturity (YTM )for a $1,000 par value bond selling on the market priced at $1,120 that matures in 6 years and has the annual coupons rate at 12%? Select one: a. 8.5 % b. 9.4 % c. 12.% d. 13.2 %

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 13P: Yield to Maturity and Current Yield You just purchased a bond that matures in 5 years. The bond has...

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Question

What is the Yield to Maturity (YTM )for a $1,000 par value bond selling on the market priced at $1,120 that matures in 6 years and has the annual coupons rate at 12%?

Select one:

a. 8.5 %

b. 9.4 %

c. 12.%

d. 13.2 %

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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