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Sommers Co.'s bonds currently sell for $1,080 and have a par value of $1,000. They pay a $100 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,125. What is their yield to maturity (YTM)

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abiolataiwo2015

Answer:

9.01%

Explanation:

Calculation to determine their yield to maturity (YTM)

We would be using financial calculation to determine their yield to maturity (YTM)

N =15 years

PV=$1,080

PMT=$100

FV=$1,000

Hence,

I/YR=YTM=9.01%

Therefore their yield to maturity (YTM) is 9.01%

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