Dyl Inc.'s bonds currently sell for $970 and have a par value of $1,000.They pay a $65 annual coupon and have a 15-year maturity,but they can be called in 5 years at $1,100.What is their yield to maturity (YTM)?

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. It considers the current market price, par value, coupon interest rate, and time to maturity. It's calculated using a complex formula that includes these variables. In this case, given the bond's current price ($970), par value ($1,000), annual coupon ($65), and time to maturity (15 years), the correct YTM is 6.83%. This calculation typically requires financial calculators or spreadsheet software to solve due to its complexity.

Dyl Inc'S Bonds Currently Sell for $970 and Have a Par