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parkway void co. issued 14-year bonds two years ago at a coupon rate of 8.7 percent. the bonds make semiannual payments. if these bonds currently sell for 111 percent of par value, what is the ytm? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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The annual return an investor will receive throughout the remaining term of the bond is expressed as a percentage and is referred to as the yield to maturity. It is determined by taking into account the cash flows that the bond will generate over its remaining life.

YTM = 4 % + 1 , 130.06 − $ 1 , 010 / $ 1 , 130.06 − $ 986.84 × (5%-4%)

4.83 percent per six months

Annual percentage is 9.66% (4.83% x 2)

The term "yield to maturity" means what?

Yield to maturity (YTM) is the overall rate of return a bond will have earned once it has paid all interest and repaid the principal. YTM is basically the internal rate of return (IRR) on a bond if held until maturity.

A bond with a 5% YTM should provide an annual return of 5% if kept until its maturity date.

Yield to maturity (YTM) is the overall interest rate that an investor earns on a bond when they purchase it at market value and hold it until it matures. It is, mathematically speaking, the discount rate at which the total of all upcoming cash flows—including principle repayment and coupon payments—equals the bond's price.

Learn more about yield to maturity here:

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