Question #7000

(Yield to maturity) Smith Industries has a 8.0% bond maturing in 12 years. What is the yield to maturity if the current market price of the bond is:
a. $1,090? B. $1,000? C. $890?

Expert's answer

S=K*(1+P/100)^{N}

where:

S - sum bond with interest,

K - sum bond (capital)

P - interest rate

N - number of years of calculation percent.

a) K= $1,090 , P=8% , N=12 Answer: S= $2 744,81

b) K= $ 1,000 , P=8% , N=12 Answer: S= $ 2 518,17

c) K= $ $890 , P=8% , N=12 Answer: S= $ 2 241,17

where:

S - sum bond with interest,

K - sum bond (capital)

P - interest rate

N - number of years of calculation percent.

a) K= $1,090 , P=8% , N=12 Answer: S= $2 744,81

b) K= $ 1,000 , P=8% , N=12 Answer: S= $ 2 518,17

c) K= $ $890 , P=8% , N=12 Answer: S= $ 2 241,17

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