Question: What is the yield (YTM) of a $100 face value bond with 5 years to maturity that pays a semi-annual coupon of 4.0% and has a current price of $92.00?
Tip: note the quick "gut check" at the end: the bond is priced below par, so we need a yield higher than the coupon rate of 4.0% ... which will remind us to finish by multiplying by 2!
Tip: note the quick "gut check" at the end: the bond is priced below par, so we need a yield higher than the coupon rate of 4.0% ... which will remind us to finish by multiplying by 2!
