What is the yield to maturity of a bond that pays an 5% coupon rate with annual coupon payments,has a par value of $1,000,matures in 15 years,and is currently selling for $769?

Question

Quizplus · Accepted Answer

Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. Using a financial calculator or equation, we can calculate that the YTM of the given bond is approximately 7.6%. Since the bond is currently selling for less than its face value (at a discount), the YTM is greater than the coupon rate of 5%. Therefore, the best choice is C.

What Is the Yield to Maturity of a Bond That