Suppose that you have a bond that has a par value of $1,000 and a coupon interest rate of 9%.Its current price is $950 and it will mature in 7 years.What is the yield to maturity?

Question

Quizplus · Accepted Answer

To calculate the yield to maturity, we need to find the discount rate that equates the present value of the bond's future cash flows (coupon payments and the final repayment of principal) to its current price. We can use financial calculators or Excel to find that the yield to maturity is approximately 10.03%. Therefore, the best answer is C.

Suppose That You Have a Bond That Has a Par