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Patch Inc. has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 6...

Patch Inc. has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 6 years, and have a 9 percent coupon. The current price is $1,110. What is the yield to maturity? 6.74 percent 7.90 percent 4.39 percent 3.37 percent

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Answer #1

Given,

Face value = $1000

Years to maturity = 6 years

Coupon rate = 9%

Current price = $1110

Solution :-

Semi annual coupon payment (PMT) = $1000 x 9% x 1/2 = $45

Semi annual periods (NPER) = 6 years x 2 = 12

FV = 1000

PV = -1110

Yield to maturity = 3.37% x 2 = 6.74%

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