What is the yield-to-maturity of a $1000, 7% semi-annual coupon bond that matures in 2 years and currently sells for $997.07 ? | Homework.Study.com (2024)

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What is the yield-to-maturity of a $1000, 7% semi-annual coupon bond that matures in 2 years and currently sells for $997.07 ?

Yield to Maturity:

Yield to maturity is the return on a bond if the bond is held to maturity, in which case the owner of the bond collects all remaining interest payments plus the principal. The yield to maturity is equivalent to the discount rate at which the present value of these payment is equal to the price of the bond.

Answer and Explanation:1

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The yield to maturity is 7.16%.

We can use the following formula to compute the approximate yield to maturity on the bond:

{eq}\frac{C + (F - P) /...

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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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