The yield to maturity that is expressed as EAR. Introduction: Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is the expressed as an interest rate on a fixed income security similar to a bond. It is also called as the interest rate that the bondholders get from their investment. It depends on the yield as of the day when the bond is issued.

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Chapter 6, Problem 5P

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To determine: The yield to maturity that is expressed as EAR.

Introduction: Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is the expressed as an interest rate on a fixed income security similar to a bond. It is also called as the interest rate that the bondholders get from their investment. It depends on the yield as of the day when the bond is issued.

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