Frazier Fudge has a $1,000 par value bond that is currently selling for $1,300.It has an annual coupon rate of 7%,paid semiannually,and has nine years remaining until maturity.What is the annual yield to maturity on the bond? (Round to the nearest whole percentage. )

Question

Quizplus · Accepted Answer

The annual yield to maturity on the bond is 5%. This is calculated by dividing the annual coupon payment by the current market price of the bond and multiplying by 100. In this case, the annual coupon payment is $70 (1,000 * 7% / 2) and the current market price of the bond is $1,300. So, the annual yield to maturity is $70 / $1,300 * 100 = 5%.

Frazier Fudge Has a $1,000 Par Value Bond That Is