The yield to maturity of a redeemable bond is calculated as the internal rate of...

CIMA F2 Question Answer

The yield to maturity of a redeemable bond is calculated as the internal rate of return of the relevant cash flows associated with the bond.

Which TWO of the following are considered relevant cash flows in this calculation?

The annual interest payments net of tax relief.

The redemption value of the bond at the date of redemption.

The market value of the bond now.

The nominal value of the bond now.

The value of the conversion premium on conversion to equity shares.

CIMA F2 Summary

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