Mid-States Utility Company sold a 10-year note with a 7 7/8% coupon and a par value of $1,000.If the note sold at a discount for $930, what was the implied yield-to-maturity to the nearest tenth of one percent? Assume interest is paid semiannually.
A)8.5%
B)8.7%
C)8.9%
D)9.4%

Question

Quizplus · Accepted Answer

N = 10
PV = -930
PMT = 78.75
FV = 1000
Solve for I = 4.47 × 2 = 8.94
Calculator solution: 4.47 percent per 6 months or 8.94%

Mid-States Utility Company Sold a 10-Year Note with a 7