Question

Chrysler has a bond outstanding with eight years remaining to maturity, a coupon rate of 5 percent, and semiannual payments. If the market price of the Chrysler bond is $729.05, what is the yield to maturity

Answer 1

Answer:

10%

Explanation:

Calculation to determine the yield to maturity

Using financial calculator

FV= 1,000

N=2*8= 16

PMT=$1,000(0.05)/2 =$25 semiannual

PV -$729.05

I/Y = 5% semiannual

YTM=?

Hence,

YTM=10% YTM

Therefore the yield to maturity is 10%