What is the yield to maturity (rounded to the nearest whole percent) of a 20 year, $100 par value bond, that pays a 10% coupon semi-annually, given that the bond's current market price is $85

the  yield to maturity is 12%

Explanation:

The computation of the yield to maturity is as follows

Given that

Future value is $100

Present value is $85

PMT = $100 × 10% ÷ 2 = $5

NPER = 20 × 2 = 40

The formula is given below:

= RATE(NPER;PMT;-PV;FV;TYPE)

The present value comes in positive

After applying the above formula, the yield to maturity is

= 6% × 2

= 12%

Hence, the  yield to maturity is 12%

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