We have a 7 percent annual-pay bond with a face value of $1,000 and a remaining life of 8 years.If this bond is currently trading at $942.53, what is the yield to maturity?

Question

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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, input the following: N=8, PV=-942.53, PMT=70, FV=1000, and solve for I/Y, which gives approximately 8%.

We Have a 7 Percent Annual-Pay Bond with a Face