Mugwump Industries Has Issued a Bond Which Has a $1,000

question 139

Multiple Choice

Mugwump Industries has issued a bond which has a $1,000 par value and a 15 percent annual coupon interest rate. The bond will mature in ten years and currently sells for $1,250. Using the approximation formula to calculate the yield to maturity (YTM) of this bond results in a YTM of

• A) 15.00 percent.
• B) 42.22 percent.
• C) 11.11 percent.
• D) 27.78 percent.

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