(Financial calculator required.) Erin is, a private investor, who can purchase $1,000 par value bonds for $980. The bonds have a 10 percent coupon rate, pay interest annually, and have 20 yearsremaining until maturity. Erin's yield to maturity is ____ percent.

Question

Quizplus · Accepted Answer

Using a financial calculator, we can solve for the yield to maturity (YTM) as follows:
N = 20 (years until maturity)
PV = $980 (purchase price)
PMT = $100 ($1,000 x 10% coupon rate)
FV = $1,000 (par value)
Solving for I/Y, we get 10.24%. Therefore, the answer is D.

(Financial Calculator Required