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You just purchased a bond that matures in 12 years. The bond has a face value of $1,000 and has an 7% annual coupon. The bond has a current yield of 5.74%. What is the bond's yield to maturity? Round your answer to two decimal places

Respuesta :

Answer:

4.58%

Explanation:

In this question, we use the Rate formula which is shown in the spreadsheet.  

The NPER represents the time period.  

Given that,  

Present value = ($1,000 × 7%) ÷ 5.74% = $1,219.52

Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 7% = $70

NPER = 12 years

The formula is shown below:  

= Rate(NPER,PMT,-PV,FV,type)  

The present value come in negative  

So, after solving this, the answer would be 4.58%

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