Rogue Outfitters Inc.has outstanding $1,000 face value 8% coupon bonds that make semiannual payments,and have 14 years remaining to maturity.If the current price for these bonds is $987.24,what is the annualized yield to maturity?

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) can be calculated using the bond price, coupon rate, and time to maturity. Given the bond's price of $987.24, a face value of $1,000, a coupon rate of 8% (which means $40 every six months), and 28 periods (14 years semiannually), the YTM is approximately 8.15% when annualized.