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12-11-2020
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You purchase a Par Value $1,000, 9% coupon, two-year maturity bond for $990. What is the annual required rate of return (YTM)?

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andromache andromache

16-11-2020

Answer:

the annual required rate of return is 9.57%

Explanation:

The computation of the required rate of return is shown below:

Given that

Future value = $1,000

Present value = $990

PMT = $1,000 × 9% = $90

NPER = 2

The formula is shown below:

=RATE(NPER;PMT;-PV;FV;TYPE)

The present value comes in negative

After applying the above formula, the annual required rate of return is 9.57%

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