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There is a bond that has a quoted price of 98.613 and a par value of $2,000. The coupon rate is 6.66 percent and the bond matures in 18 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?

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Zviko

Answer:

The Yield to Maturity of the Bond (YTM) is 113.86 %

Explanation:

The Yield to Maturity of the Bond (YTM) can be determined using a Financial Calculator as follows :

Pv = -$98.613

Fv = $2,000

p/yr = 2

n = 18 × 2

Pmt = ($2,000 × 6.60%) ÷ 2 = $66

r = ?

Using a Financial Calculator r is 113.86 %.

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