An effective yield to maturity


Mr. Chu has identified the following bond (Bond B) for investment:

A $1 million par, 12% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which was issued on Jul 1, 2011 and will mature on January 1, 2028.

If Mr. Chu purchased Bond B on a coupon payment day when the bond was priced to have an effective yield to maturity of 14.49% p.a. Find the remaining life of Bond B if its market value was $889,387.595 on date of purchase.

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Accounting Basics: An effective yield to maturity
Reference No:- TGS0711302

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