Answer:
The correct answer is 2.98% (approx.).
Explanation:
According to the scenario, the computation for the given data are as follows:
First we calculate the current value:
Current value (CV) = 100,000 × 105.43%
= 105,430
Now, Annual coupon (AC) = 100,000 × 3.4%
= 3,400
So, we can calculate the yield to maturity by using following formula:
Yield to maturity = [AC + (Face value - CV) ÷ maturity time] ÷ (Face value + CV) ÷ 2
By putting the value we get,
= [ 3,400 + (100,000 - 105,430) ÷ 16] ÷ (100,000 + 105,430) ÷ 2
= [ 3,060.625] ÷ (102,715)
= 2.98%(Approx)
