Your firm has issued a 10-year $1,000.00 par value semiannual 10% coup

Your firm has issued a 10-year $1,000.00 par value semiannual 10% coupon bond that sells for $1,000 in the market place. The proceeds from the sale of the bond issue are $975.00 per bond.

What is your firm’s yield to maturity on this new bond issue? Use a financial calculator to determine your answer.
A) 5.15%
B) 10.16%
C) 10.30%
D) 10.41%

ANSWER

Answer: D
Explanation: D)
Mode = P/Y = 2; C/Y = 2
Input 20 ? -975 50 1,000
Key N I/Y PV PMT FV
CPT 10.41%