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