Explore BrainMass

Explore BrainMass

    Calculating the current yield and YTM in the given case

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Charlotte's Clothing issued a 5 percent bond with a maturity date of 15 years. Five years have passed and the bond is selling for $690.

    (a)What is the current yield?
    (b) What id the yeild to maturity?
    If five years later the yield to maturity is 10 percent, what will be the price of the bond?

    © BrainMass Inc. brainmass.com June 4, 2020, 3:26 am ad1c9bdddf

    Solution Preview

    Please refer attached file for better clarity of functions in MS Excel.

    (a) What is the current yield?
    Current Price=Po=$690
    Coupon interest=C=1000*5%=$50
    Current Yield=Coupon interest/Po=7.25%

    (b) What id the yield to maturity?

    Number of coupon payments left=10
    Maturity amount=Face ...

    Solution Summary

    Solution describes the steps to calculate the current yield, YTM and price of a bond in the given case. Calculations are carried out with the help of suitable functions in MS Excel.