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    Yield to Maturity of a Ten-Year Bond

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    A ten-year bond pays 11% interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity?

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    yield to maturity
    A ten-year bond pays 11% interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity?

    We need to calculate how much the bonds have been issued by using the formula as follows: -

    where B is the issued price
    C is the coupon payment
    r is the discount or yield ...

    Solution Summary

    This solution is comprised of a detailed explanation to compute what is approximate yield to maturity.

    $2.19

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