PBJ Corporation issued bonds on January 1,2006.The bonds had a coupon rate of 5.5%,with interest paid semiannually.The face value of the bonds is $1,000 and the bonds mature on January 1,2021.What is the yield to maturity for a PBJ Corporation bond on January 1,2012 if the market price of the bond on that date is $950?

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The yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. It considers the current market price, par value, coupon interest rate, and time to maturity. It's calculated by solving the equation for YTM, which equates the present value of the bond's future cash flows to its current market price. Given the bond's market price of $950, a face value of $1,000, a coupon rate of 5.5% with semiannual payments, and a maturity date 9 years away (from 2012 to 2021), the YTM is higher than the coupon rate because the bond is bought at a discount ($950 < $1,000). The correct YTM, considering these factors and the time to maturity, is 6.23%. Calculating the exact YTM requires financial calculators or software as it involves solving for the rate in the present value of an annuity equation, which is not straightforward algebraically.

PBJ Corporation Issued Bonds on January 1,2006