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Author Question: If the par value of a bond is equal to the bond price, then we know the yield to maturity is equal ... (Read 79 times)

tuffie

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on: Jul 10, 2018
If the par value of a bond is equal to the bond price, then we know the yield to maturity is equal to the coupon rate.
 
  Indicate whether the statement is true or false.

Question 2

Southern Transit Corporation has 1,000 par value, twenty-year, 6 annual coupon bonds, outstanding currently selling for 696.25. What is the yield to maturity on these bonds? Use a calculator for your answer.
 
  What will be an ideal response?


briezy

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: TRUE

Answer to Question 2

Answer: 9.43. FV = 1,000; PMT = 1,000  .06 = 60; N = 20; PV = 696.25. CPT 1/Y to get 9.43.


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