Explore BrainMass

Explore BrainMass

    Yield to maturity

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    You buy an 8 percent coupon, 10-year maturity bond for $980. A year later, the bond price is $1,100.

    a. What is the new yield to maturity on the bond?
    b. What is your rate of return over the year?

    © BrainMass Inc. brainmass.com June 3, 2020, 8:15 pm ad1c9bdddf

    Solution Preview

    a. The YTM is the rate that will make the present value of interest and principal equal to the price today. The price is 1,100, the annual interest is $80, the principal ...

    Solution Summary

    The solution explains how to calculate the yield to maturity on a bond and the rate of return.