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Adams Enterprises’ noncallable bonds currently sell for $1,480. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity

Respuesta :

jepessoa

Answer:

YTM = 4.27%

Explanation:

to calculate yield to maturity we can use the following formula:

YTM = [C + (F - P) / n] / [(F + P) / 2]

  • coupon = $85
  • n = 15
  • F = $1,000
  • P = $1,480

YTM = [$85 + ($1,000 - $1,480) / 15] / [($1,000 + $1,480) / 2]

YTM = ($85 - $32) / $,1240

YTM = $53 / $,1240 = 0.0427 ≈ 4.27%

The Yield to maturity in the case when the currently sell is $1,480 should be  4.27%

Calculation of the yield to maturity:

Since

We know that

YTM = [C + (F - P) / n] / [(F + P) / 2]

here,

coupon = $85

n = 15

F = $1,000

P = $1,480

So,

YTM = [$85 + ($1,000 - $1,480) / 15] / [($1,000 + $1,480) / 2]

YTM = ($85 - $32) / $,1240

YTM = $53 / $,1240 = 0.0427

≈ 4.27%

Learn more about rate here: https://brainly.com/question/24445639

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