A corporate bond with a face value of $1,000 matures in 4 years and has an 8% coupon paid at the end of each year. The current price of the bond is $932. What is the yield to maturity for this bond?
A) 5.05%.
B) 8.58%.
C) 10.15%.
D) 11.92%.
E) 6.48%.

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is the interest rate that equates the present value of the bond's future cash flows to its current price. Using a financial calculator or YTM formula, the YTM is approximately 10.15%.

A Corporate Bond with a Face Value of $1,000 Matures