The market price of a bond is $875.00. The bonds have a 4.25% coupon rate paid annually and mature in six years. What is the yield to maturity for the bonds if an investor buys them at the $875.00 market price? 2.30% 6.86% 15.34% 52.33%
| Using financial calculator BA II Plus - Input details: | # |
| FV = Face Value at maturity = | -1,000 |
| PV = Present Value or Price of the bond = 90%*100000 = | 875 |
| N = Total number of coupon payments = | 6 |
| PMT = Coupon = 4.25% of FV | -42.500 |
| CPT > I/Y = Rate or yield (rounded to two decimal places) = | 6.86 |
| Convert yield in % form = I/Y / 100 = | 6.86% |
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