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Yield to maturity (YTM) is another way of considering a bond's price. The YTM is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term yield but is expressed as an annual rate i.e., it is the internal rate of return (IRR) of an investment in a bond if the investor were to hold the bond until it's maturity (assuming all payments are made as scheduled). Using the elements of the above scenario $ 1 million worth of bonds to investors. Under the terms of the bond, ABC promises to pay bondholders 5% interest per year for five years, with interest paid semiannually. Each of the bonds has a face value of $1,000, meaning ABC plan to sell how many bonds in total? Work out the annuity payment and the YTM anticipated on the bond for the 5 years?

Yield to maturity (YTM) is another way of considering a bond's price. The YTM is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term yield but is expressed as an annual rate i.e., it is the internal rate of return (IRR) of an investment in a bond if the investor were to hold the bond until it's maturity (assuming all payments are made as scheduled). Using the elements of the above scenario $ 1 million worth of bonds to investors. Under the terms of the bond, ABC promises to pay bondholders 5% interest per year for five years, with interest paid semiannually. Each of the bonds has a face value of $1,000, meaning ABC plan to sell how many bonds in total? Work out the annuity payment and the YTM anticipated on the bond for the 5 years?

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...
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Yield to maturity (YTM) is another way of considering a bond's price. The YTM is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term yield but is expressed as an annual rate i.e., it is the internal rate of return (IRR) of an investment in a bond if the investor were to hold the bond until it's maturity (assuming all payments are made as scheduled). Using the elements of the above scenario $ 1 million worth of bonds to investors. Under the terms of the bond, ABC promises to pay bondholders 5% interest per year for five years, with interest paid semiannually. Each of the bonds has a face value of $1,000, meaning ABC plan to sell how many bonds in total? Work out the annuity payment and the YTM anticipated on the bond for the 5 years?
Transcribed Image Text:Yield to maturity (YTM) is another way of considering a bond's price. The YTM is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term yield but is expressed as an annual rate i.e., it is the internal rate of return (IRR) of an investment in a bond if the investor were to hold the bond until it's maturity (assuming all payments are made as scheduled). Using the elements of the above scenario $ 1 million worth of bonds to investors. Under the terms of the bond, ABC promises to pay bondholders 5% interest per year for five years, with interest paid semiannually. Each of the bonds has a face value of $1,000, meaning ABC plan to sell how many bonds in total? Work out the annuity payment and the YTM anticipated on the bond for the 5 years?
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