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ABC Corp has bonds currently selling for $1,025.89 and matures in 5 years. It has a...

ABC Corp has bonds currently selling for $1,025.89 and matures in 5 years. It has a face value of $1,000. It has a coupon of 6.75%, paid annually, what is the yield-to-maturity?

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Answer #1

Information provided:

Face value= future value= $1,000

Current price= present value= $1,025.89

Time= 5 years

Coupon rate= 6.75%

Coupon payment= 0.0675*1,000= $67.50

The yield to maturity is calculated by entering the below in a financial calculator:

FV= 1,000

PV= -1,025.89

N= 5

PMT= 67.50

Press the CPT key and I/Y to calculate the yield to maturity.

The value obtained is 6.13.

Therefore, the yield to maturity is 6.13%.

In case of any query, kindly comment on the solution.

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