Lambda Co.has bonds outstanding that mature in 10 years.The bonds have $1,000 par value,pay interest annually at a rate of 9%,and have a current selling price of $1,125.The yield to maturity on the bonds is:

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is the internal rate of return (IRR) on the bond's cash flows, which include the annual coupon payments and the repayment of the par value at maturity. Given the bond's current price of $1,125, a coupon rate of 9% on a $1,000 par value, and a 10-year maturity, the YTM is calculated to be approximately 7.20%.

Lambda CoHas Bonds Outstanding That Mature in 10 Years