Question

Parkway Void Co. issued 17-year bonds two years ago at a coupon rate of 8.6 percent. The bonds make semiannual payments. If these bonds currently sell for 110 percent of par value, what is the YTM

Answer 1

Answer:

7.48 %

Explanation:

Lets first assume that the par value on this Bond is $100.

Then, we would calculate the Yield to Maturity as

PV = $100 × 110% = - $110

N = 15 × 2 = 30

P/yr = 2

Pmt = ($100 × 8.6 %) ÷ 2 = $4.30

FV = $100

YTM = ?

Using a financial calculator to input the values as above, the Yield to Maturity of this Bond will be 7.48 %