Question

Footsteps Co. has a bond outstanding with a coupon rate of 5.9 percent and annual payments. The bond currently sells for $984.29 matures in 23 years and has a par value of $1000 what is the Ytm of the

Answer 1

YTM is the yield an investor earns if it holds investment untill maturity.

YTM

=

Average Income / Average Investments

Where,

=

(C+(F-P)/n)/((F+P)/2)

C

$       1,000

x

5.90%

=

$    59.00

=

(59+(1000-984.29)/23)/((1000+984.29)/2)

F

$       1,000

=

6.02%

P

$     984.29

n

23