The Blackburn Group has recently issued 20-year, unsecured bonds rated BB by Moody's. These bonds yield 443 basis points above the U.S. Treasury yield of 2.76%. The yield to maturity on these bonds is

Question

Quizplus · Accepted Answer

To calculate the yield to maturity on the Blackburn Group's 20-year bonds, we need to add the yield spread (443 basis points or 4.43%) to the Treasury yield (2.76%).

Yield to maturity = Treasury yield + Yield spread
Yield to maturity = 2.76% + 4.43%
Yield to maturity = 7.19%

Therefore, the answer is B) 7.19%.

The Blackburn Group Has Recently Issued 20-Year, Unsecured Bonds Rated