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Calculating Yield to Maturity and Current Yield

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4. Bond Pricing. A 6-year Circular File bond pays interest of $80 annually and sells for $950. What are its coupon rate, current yield, and yield to maturity?

5. Bond Pricing. If Circular File (see question 4) wants to issue a new 6-year bond at face value, what coupon rate must the bond offer?

6. Bond Yields. 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

The solution includes an Excel file that calculates a bond's yield to maturity using Excel built-in formula, as well as a word document that shows the formula for calculating the yield to maturity as well as the current yield of a bond.

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4. Coupon rate = $80/$1,000 = 0.080 = 8.0%
Current yield = $80/$950 = 0.0842 = 8.42%
Yield to maturity = 9.12% [n = 6; PV = ...

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  • MBA, California State University, Sacramento
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