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 $987.24, what is the annualized yield to maturity?

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Quizplus · Accepted Answer

The yield to maturity (YTM) is calculated using the bond's current price, coupon payments, face value, and time to maturity. Given the bond's price of $987.24, a face value of $1,000, a coupon rate of 8% (which means $40 semiannual payments), and 28 periods (14 years), the YTM is approximately 8.15% when annualized.