Suppose today a 10 per cent coupon bond sells at par. Two years from now, the required return on the same bond is 8 per cent. What is the YTM?
^That's a question I've been asked and have literally no clue about how to calculate the YTM.
My understanding is: YTM is the anticipated return on a bond if held to maturity. If I buy a fresh bond at say \$90 and the par value is \$100 at 10% coupon rate, the YTM will be 10/90 = 11.11%. So for this question, If I buy a bond on the secondary market at par value, the YTM should equal the coupon rate no? If so, how does rrr affect YTM?
I'm so confused, send help.