Question #7000
(Yield to maturity) Smith Industries has a 8.0% bond maturing in 12 years. What is the yield to maturity if the current market price of the bond is:
a. $1,090? B. $1,000? C. $890?
a. $1,090? B. $1,000? C. $890?
Expert's answer
S=K*(1+P/100)N
where:
S - sum bond with interest,
K - sum bond (capital)
P - interest rate
N - number of years of calculation percent.
a) K= $1,090 , P=8% , N=12 Answer: S= $2 744,81
b) K= $ 1,000 , P=8% , N=12 Answer: S= $ 2 518,17
c) K= $ $890 , P=8% , N=12 Answer: S= $ 2 241,17
where:
S - sum bond with interest,
K - sum bond (capital)
P - interest rate
N - number of years of calculation percent.
a) K= $1,090 , P=8% , N=12 Answer: S= $2 744,81
b) K= $ 1,000 , P=8% , N=12 Answer: S= $ 2 518,17
c) K= $ $890 , P=8% , N=12 Answer: S= $ 2 241,17
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