question archive The bonds issued by United Corp
The bonds issued by United Corp
Subject:FinancePrice:2.86 Bought9
The bonds issued by United Corp. bear a coupon of 8 percent, payable semiannually. The bond matures in 19 years and has a $1,000 face value. Currently, the bond sells at $981. The yield to maturity (YTM) is %
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Interest payments= $1000×8%×6/12 = $40
n= period to maturity = 19 × 2= 38 (semiannuals)
F= Face value = $1000
P=Current Price = $981
Yield to Maturity (YTM) = [$40 + ($1000-$981)/38] / [($1000+$981)/2]
= 0.0408844018 × 100 %
=4.09 % (Answer)
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