Question
Question: Bigbox, Inc., has bonds outstanding that will mature in eight years. These bonds pay interest semiannually and have a coupon rate of 4.6 percent.
Question: Bigbox, Inc., has bonds outstanding that will mature in eight years. These bonds pay interest semiannually and have a coupon rate of 4.6 percent. If the bonds are currently selling at $888.92, what is the yield to maturity that an investor who buys them today can expect to earn? What is the effective annual yield?
Do I need to multiply the answer by 2 to find the annual yield or leave as is?
The answer I have reached is: Yield to Maturity: 4.8% x2 = 9.59% and Effective Annual Yield: 10%. Is this correct?
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An Introduction to Investment Banks, Hedge Funds, and Private Equity
Authors: David P. Stowell
1st edition
978-0123745033, 0123745039, 978-9380931074
