# Bond Yield to Maturity

A bond has 10 years until maturity, a coupon rate of 8 percent, and sells

for $1,100.

a. What is the current yield on the bond?

b. What is the yield to maturity

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#### Solution Preview

A bond has 10 years until maturity, a coupon rate of 8 percent, and sells

for $1,100.

a. What is the current yield on the bond?

Current yield = Annual Coupon Payment/Current Price

= 80/1,100

= 7.27%

b. What is the yield to maturity

We need to calculate how much the bonds have been issued by using the formula as follows: -

where B is the issued price

C ...

#### Solution Summary

This solution is comprised of a detailed calculation to find Bond Yield to Maturity and current yield.

$2.19