A bond has a par value of $1,000 and a stated rate of interest of 10% and it matures in 10 years. The bond is currently selling in the market at a price of $900. The YTM on this bond is
Annual coupon=1000*10%=100
Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2
=[100+(1000-900)/10]/(1000+900)/2
which is equal to
=11.75%
A bond has a par value of $1,000 and a stated rate of interest of 10%...