BCD's $1,000 par value bonds currently sell for $798.50. The coupon rate is 10%, paid semiannually. If the bonds have five years before maturity, what is the yield to maturity or expected rate of return?
What will be an ideal response?
Answer: N=10, PV=-798.50, PMT=50, FV=1000, solve for i=8.00 semi-annual rate, 8.00% × 2 = 16%
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What will be an ideal response?