Answer :
Radoski corporation's bonds make an annual coupon interest payment of 7.35% every year. the bonds have a par value of $1,000, a current price of $920, and mature in 12 years. what is the yield to maturity on these bonds is 8.44%.
Coupons are usually defined in phrases of the "coupon fee", that's calculated through including the sum of coupons paid in keeping with 12 months and dividing it through the bond's face price. For example, if a bond has a face price of $1,000 and a chit fee of 5%, then it will pay overall coupons of $50 in keeping with 12 months. Typically, this could encompass semi-annual bills of $25 each.
Not all bonds have coupons for interest payments. Zero-coupon bonds are people who pay no coupons and accordingly have a chit fee of 0%. Such bonds make simplest one charge: the charge of the face price at the adulthood date. Normally, to compensate the bondholder for the time price of money, the fee of a zero-coupon bond will constantly be much less than its face price on any date earlier than the adulthood date.
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