Hacker Software has 10% coupon bonds on the market with 19 years to maturity. The bonds make...
Question:
Hacker Software has 10% coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.8% of par. What is the current yield on the bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the YTM? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the effective annual yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Yield to Maturity:
Yield to maturity is the implicit return on a bond if the bond is purchased and held to maturity, which is different from the stated coupon rate unless the bond is priced at par. All else the same, a bond's yield to maturity negatively relates with its price.
Answer and Explanation: 1
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View this answerThe bond's YTM is 9.12% and the effective annual yield is 9.33%.
A bond's yield to maturity is the discount rate that equates the present value of...
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Yield to Maturity | Definition, Formula & Equation
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Chapter 5 / Lesson 32
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Learn what yield to maturity (YTM) is. Understand the definition of yield to maturity (YTM) and know how to calculate it. Discover how to calculate the bond yield.
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