What is the yield to maturity of a five-year,$5000 bond with a 4.5% coupon rate and semi-annual coupons if this bond is currently trading for a price of $4876?
A)4.30%
B)5.07%
C)6.30%
D)8.60%
E)4.50%

Question

Quizplus · Accepted Answer

To find the yield to maturity, we need to solve for the discount rate that makes the present value of the bond's cash flows equal to its current price. Using the financial calculator or Excel, we can find that the yield to maturity is approximately 5.07%. Choice B is the only option closest to this value.

What Is the Yield to Maturity of a Five-Year,$5000 Bond