A Japanese company has a bond outstanding that sells for 87 percent of its ¥100,000 par value. The bond has a coupon rate of 4.6 percent paid annually and matures in 17 years. What is the yield to maturity of this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 

Answer:

The Approximate Yield to Maturity Formula =[Coupon + ( Face Value - Market Price) / Number of years to maturity] / [( Face Value + Market Price)/2 ] *100

= [$4,600+ ( $ 100,000- $ 87000) / 17] /[( $ 100,000+ $87000)/2] *100

= 5364.705882 / 93,500*100

=5.73765335%

Note : Coupon = Rate * Face Value

= 4.6% * 100,000

= $ 4,600

Since this formula gives an approximate value, the financial calculators can be used alternatively.

where,

Par Value = 100,000

Market Price = 87,000

Annual rate = 4.6% and

Maturity in Years = 17 Years

Hence the yield to maturity =5.83%