A coupon bond that pays interest of $40 semi-annually has a par value of $1,000, matures in four years, and is selling today at a $36 discount from par value. The yield to maturity on this bond is

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The bond pays $80 annually ($40 semi-annually), has a par value of $1,000, and is selling for $964 ($1,000 - $36). The yield to maturity can be calculated using the formula for YTM, which considers the coupon payments, the difference between the purchase price and par value, and the time to maturity. The YTM is approximately 9.09%.

A Coupon Bond That Pays Interest of $40 Semi-Annually Has