Peerless Securities has an issue of $1,000 par value bonds with 18 years remaining to maturity.The bonds pay 7.7% interest on a semi-annual basis.The current market price of the bonds is $1,175.What is the yield-to-maturity of the bonds?

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The yield-to-maturity is the annual rate of return an investor can expect to receive if they hold the bond until maturity. It is calculated using the following formula:YTM = (C + (FV - PV) / N) / ((FV + PV) / 2)where:C = the annual coupon paymentFV = the face value of the bondPV = the present value of the bondN = the number of years to maturityIn this case, the annual coupon payment is $77 (7.7% of $1,000), the face value of the bond is $1,000, the present value of the bond is $1,175, and the number of years to maturity is 18. Plugging these values into the formula, we get:YTM = (77 + (1,000 - 1,175) / 18) / ((1,000 + 1,175) / 2)YTM = (77 - 94.44) / 1,087.5YTM = 6.09%Therefore, the yield-to-maturity of the bonds is 6.09%.

Peerless Securities Has an Issue of $1,000 Par Value Bonds