Rogue Outfitters Inc. has outstanding $1,000 face value 12% coupon bonds that make semiannual payments, and have 8 years remaining to maturity. If the current price for these bonds is $1,274.35, what is the annualized yield to maturity?
A) 7.81%
B) 7.40%
C) 6.12%
D) 6.00%
Answer: B
Explanation: B) The answer is found through an iterative (trial and error) process using the bond pricing formula.
Bond Price = PMT × + ;
MODE = END, P/Y = 2, C/Y = 2
INPUT 16 ? -1,274.35 60 1,000
KEY N I/Y PV PMT FV
CPT 7.40
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