Author Question: What does the yield to maturity on bonds refer to? (Read 33 times)

rubiosusy7 · **on:** Aug 7, 2023

Question 1

Wachowicz Corporation issued 20-year, noncallable, 8.6% annual coupon bonds at their par value of $1,000 four years ago. Today, the market interest rate on these bonds is 6.3%. What is the current price of the bonds, given that they now have 16 years to maturity?

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$1,227.72

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$1,248.05

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$1,271.00

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$1,295.60

Question 2

What does the yield to maturity on bonds refer to?

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the expected rate of return on the bonds if purchased at the current price and held to maturity

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the promised rate of return on the bonds if purchased at the current price and held to maturity

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the ratio of the annual interest payment divided by the bond’s current price

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the rate of return due to the interest payment plus the rate of return due to the price change

ladan86 · **Reply #1 on:** Aug 7, 2023

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