You buy a bond for $1118 that pays $20 interest every 6 months. It will reach maturity in 9 years at which time it will return its face value of $1000 plus the final $20 interest payment. What is the pre-tax annual rate of return on this bond? Estimate to 2 decimal places.
Solution
Yield to maturity=C+F-P/N
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F+P/2
A bond that pays 4.00% per year, that has a market value of $1,118.00, and that matures in 9 years will have a yield to maturity of 2.52 %and current yield=3.57%and Annual return=2.2%(total monies from bond=1360)
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Beyond the EU: DORA and NIS 2 Directive's Global Impact
You buy a bond for $1118 that pays $20 interest every 6 months- It wil.docx
1. You buy a bond for $1118 that pays $20 interest every 6 months. It will reach maturity in 9 years
at which time it will return its face value of $1000 plus the final $20 interest payment. What is
the pre-tax annual rate of return on this bond? Estimate to 2 decimal places.
Solution
Yield to maturity=C+F-P/N
--------------
F+P/2
A bond that pays 4.00% per year, that has a market value of $1,118.00, and that matures in 9
years will have a yield to maturity of 2.52 %and current yield=3.57%and Annual
return=2.2%(total monies from bond=1360)
