A government bond issued in Germany has a coupon rate of 5%,a face value of 100.00 euros,and matures in five years.The bond pays annual interest payments.Calculate the yield to maturity of the bond (in euros)if the price of the bond is 106.00 euros.

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is calculated using the formula that equates the present value of future cash flows (coupon payments and face value) to the bond's current price. Given the bond's price of 106 euros, a coupon rate of 5%, and a face value of 100 euros, the YTM is approximately 3.66%.

A Government Bond Issued in Germany Has a Coupon Rate