Problem:
Tom is considering the purchase of Red Lobster Inc. bonds that were issued 4 years ago. When the bonds were originally sold, they had a 25-year maturity and a 6.54% coupon interest rate paid annually. The bond is currently selling for $1,178.
Required:
Question: What is the yield to maturity on the bonds if you purchased the bond today?
Note: Explain the solution in detail.