Economy, asked by riya0076, 9 months ago

Suppose that a consol has a promised payment of 6 pound per 100 pound national. This consol is now traded at 150 pounds. What is the current yield to maturity of the consol?
1. 1%
2.2%
3.3%
4.4%​

Answers

Answered by poojan
1

The current yield to maturity of the consol is 4%

Explanation :

Given that a consol has a promised payment of 6 pound per 100 pound notional.

But as it is traded at 150 pounds, 150 pounds will be considered as the payment.

Now, the current yield = payment / trade

                                     = 6 / 150

                                     = 0.04

Converting 0.04 rate to percentage = 0.04 x 100% = 4%

Therefore, the curent yield to maturity of the consol is 4%

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Answered by PiaDeveau
1

Current yield to maturity of the consol = 4%

Explanation:

Given:

Payment made = 6 pound per 100 pound national

New consol payment = 150 pounds

Find:

Current yield to maturity of the consol

Computation:

Current yield to maturity of the consol = [Payment made / New consol payment]100

Current yield to maturity of the consol = [6 / 150]100

Current yield to maturity of the consol = [0.04]100

Current yield to maturity of the consol = 4%

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