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My company has a bond outstanding with a par value of $1000, an annual interest payment of $110, a market price of $1200 and a maturity in 10 years. Determine the following:

a. Coupon rate
b. Current yield
c. Approximate yield to maturity

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a. Coupon rate

Coupon rate = Annual interest payment/Par value
= 110/1,000
= 11.00%

b. Current yield

Current yield = Annual interest payment/Market price
= 110/1,200
= 9.17%

c. Approximate yield to maturity

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Solution Summary

This solution is comprised of a detailed explanation to determine the coupon rate, current yield, and approximate yield to maturity.