Rogue Outfitters Inc. has outstanding $1,000 face value 4% coupon bonds that make semiannual payments, and have 10 years remaining to maturity. If the current price for these bonds is $938.57, what is the annualized yield to maturity?
A) 4.78%
B) 4.96%
C) 5.02%
D) 5.13%
Answer: A
Explanation: A) 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 20 ? -938.57 20 1,000
KEY N I/Y PV PMT FV
CPT 4.78
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