Benson Biometrics Inc., has outstanding $1,000 face value 8% coupon bonds that make semiannual payments, and have 14 years remaining to maturity. If the current price for these bonds is $1,118.74, what is the annualized yield to maturity?

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is calculated using the bond price, coupon payments, face value, and time to maturity. Given the bond price of $1,118.74, a face value of $1,000, a coupon rate of 8% (which means $80 annually or $40 semiannually), and 14 years to maturity, the YTM is approximately 6.68% when calculated using a financial calculator or YTM formula.