contestada

A corporate bond pays 7​% of its face value once per year. If this ​$10 comma 000 10​-year bond sells now for ​$10 comma 600​, what yield will be earned on this​ bond? Assume the bond will be redeemed at the end of 10 years for ​$10 comma 000.

Respuesta :

Answer:

6.18%

Explanation:

We use the RATE formula i.e to be shown in the attachment below:

Present value = $10,600

Future value or Face value = $10,000  

PMT = 10,000 × 7% = $700

NPER = 10 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the yield to maturity is 6.18%

Ver imagen andromache

When The bond will be redeemed at the end of 10 years for ​$10 comma 000 is = 6.18%

Calculation of Bond Redeemed

We use the RATE formula i.e to be shown in the attachment below:

Then Present value = $10,600

After that Future value or Face value is = $10,000  

Then PMT = 10,000 × 7% = $700

After that, NPER = 10 years

Then The formula is shown below:  

Now, = Rate(NPER;PMT;-PV;FV; type)

Then The present value come in negative  

Therefore, after solving this, the yield to maturity is 6.18%

Find more information about Bond Redeemed here:

https://brainly.com/question/11882834

Otras preguntas