Asked by Jennie McLean on May 26, 2024
Verified
An investor purchased a 7% bond at 90 (no commission). The bond matures in 10 years. Calculate the rate of yield to maturity. (Round answer to two decimal places.)
Yield to Maturity
The total return expected on a bond if held until it matures, considering both interest payments and the capital gain or loss.
Bonds
Long-term notes that are bought and sold on the open market, much like stocks.
Commission
A payment made to an individual or business for facilitating a sale or service, typically calculated as a percentage of the transaction value.
- Understand the concept and calculation of yield to maturity for bonds.
- Apply mathematical skills in finance to calculate bond yields.
- Analyze the relationship between bond prices, interest rates, and maturity.
Verified Answer
TD
Learning Objectives
- Understand the concept and calculation of yield to maturity for bonds.
- Apply mathematical skills in finance to calculate bond yields.
- Analyze the relationship between bond prices, interest rates, and maturity.