What is the YTM of a four-year bond with a par value of $1,000 and a 4 percent coupon rate when the bond pays coupons semi-annually and is priced at $932.35?

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Quizplus · Accepted Answer

The YTM is calculated based on the bond's price, coupon payments, and time to maturity. Given the bond pays semi-annual coupons, the annual coupon payment is $40, or $20 every six months. The bond's price is $932.35, and it matures in four years, or eight periods. Solving for YTM using these inputs results in an annual YTM of approximately 5.92%.

What Is the YTM of a Four-Year Bond with a Par