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24-11-2022
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Broke benjamin company has a bond outstanding that makes semiannual payments with a coupon rate of 5. 6 percent. The bond sells for $951. 07 and matures in 12 years. The par value is $1,000. What is the ytm of the bond?.

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Neetuverma Neetuverma

02-12-2022

The yield to maturity of the bond is 5.96%

What is yield to maturity?

The yield to maturity (YTM), book yield, or redemption yield of a bond or other fixed-interest security, such as gilts, is an estimation of the total rate of return expected to be earned by an investor who purchases a bond at a specific market price, holds it until maturity, and receives all interest payments and the capital redemption as scheduled. It is the internal rate of return, or the discount rate at which the present value of all expected future bond cash flows equals the bond's market price. In reality, a bond's investment return is significantly influenced by the rates that will actually be paid on reinvested interest payments.

I/Y = 2.98%

Annual YTM = 5.96%(2.98%*2)

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