Question

Fresh Fruit, Inc. has a $1,000 par value bond that is currently selling for $867. It...

Fresh Fruit, Inc. has a $1,000 par value bond that is currently selling for $867. It has an annual coupon rate of 10.51 percent, paid semiannually, and has 26-years remaining until maturity. What would the annual yield to maturity be on the bond if you purchased the bond today and held it until maturity?

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Answer #1

Calculate the yield to maturity as follows:

Therefore, the semiannual rate is 6.106%.

Therefore, annual yield is 6.106%*2  12.21%.

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