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