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A perpetual bond with a par value of $1,000 and a coupon rate of 8.25% (semiannual coupon) has a current market price of $935. What is its yield to maturity?

Answer :

Tundexi Tundexi

Today at 8:48 AM

Answer:

8.88%

Explanation:

Price of the perpetual bond = Interest / Cost of debt

$935 = 82.50 / Cost of debt

Cost of debt = 82.50 / 935

Cost of debt = 0.08824

Cost of debt = 8.88%

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