Homework Answers
Information provided:
Face value= future value= $100
Current price=present value= $96
Time= 3 years*4= 12 quarters
Coupon rate= 8%/4= 2% per quarter
Coupon payment= 0.02*100= $2
The yield to maturity is calculated by entering the below in a financial calculator:
FV= 100
PV= -96
N= 12
PMT= 2
Press the CPT key and I/Y to compute the yield to maturity.
The value obtained is 2.3873.
Therefore, the yield to maturity is 2.3873%*4= 9.5492% 9.55%.
Hence, the answer isoption d.
In case of any query, kindly comment on the solution.
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