Current yield/yield to maturity
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Apple has 8% coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for 93% of par, or $930. Compute:
1. The Current Yield
2. The Yield to Maturity
What is the difference between these two?
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Solution Summary
The solution explains how to calculate the current yield and yield to maturity for a bond.
Solution Preview
1. Current yield = Annual Interest/Price
Annual interest = 1,000 X 8% = 80
Price = 930
Current yield = 80/930 = 8.60%
2. Yield to ...
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