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​Fitzgerald's 35​-year bonds pay 11 percent interest annually on a ​$1,000 par value. If the bonds...

​Fitzgerald's 35​-year bonds pay 11 percent interest annually on a ​$1,000 par value. If the bonds sell at $875​, what is the​bond's yield to​ maturity? What would be the yield to maturity if the bonds paid interest​ semiannually? Explain the difference.

a. The​ bond's yield to maturity if the bond pays interest annually is __​%.

The bonds yield to maturity if the bond pays interest semiannaually is __

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Answer #1

Yield to maturity (YTM) is the total return earned on a bond if the bond is held until it matures.

The difference of YTM in both the above situation is 0.38% p.a.

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