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    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 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

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