Respuesta :
Coupon rate at which Rollins incorporated the bond =4.5%
Number of years to maturity=11.5 years
Face value of bond= 1000$
Price of the bond or the price value of the bond =$1105.5
NPER OF THE BOND =23 years to maturity
:Here the NPER has to be multiplied by 2 according to the question
Also we know that PMT= (face value x coupon rate)/2
PMT of the bond=22
Rate at which bond increases= 1.69%
Yield of maturity=2 x rate
=2 x 1.69%
=3.38%
So the yield to maturity is 3.38%
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From the given information, The yield to maturity is equals 2 times rate, or 2 times 1.69%, or 3.38%.
- The projected total return on a bond, assuming it is kept until maturity, is known as yield to maturity (YTM). Yield to maturity, which is expressed as an annual rate, is regarded as a long-term bond yield. To put it another way, it is the internal rate of return (IRR) of a bond investment if the investor retains the bond to maturity, with all payments made as planned and reinvested at the same rate.
Rollins issued the bond with a 4.5% coupon rate.
11.5 years are required for maturity.
Bonds have a $1,000 face value.
Price of the bond or its par value is $1105.5, and its remaining maturity period is 23 years.
Here, the question specifies that the NPER must be multiplied by 2.
Additionally, we understand that the bond's PMT is equal to 22.
Increase in bond rate = 1.69%
Yield of maturity equals 2 times rate, or 2 times 1.69%, or 3.38%.
The yield to maturity is therefore 3.38%.
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