A corporate bond with a face value of $1,000 matures in 4 years and has a coupon rate of 6.25 percent. The current price of the
bond is $932 and interest is paid semiannually. What is the yield to maturity?
1 answer:
Answer:
8.28%
Explanation:
We use the Rate formula shown in the spreadsheet for this question
The NPER specifies the time period.
Given that,
Present value = $932
Future value or Face value = $1,000
PMT = 1,000 × 6.25% ÷ 2 = $31.25
NPER = 4 years × 2 = 8 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
the yield to maturity is 8.28%
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