# Current yield/yield to maturity

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 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 ...

#### Solution Summary

The solution explains how to calculate the current yield and yield to maturity for a bond.

$2.19