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    Finance : Bond Pricing and Bond Yields

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    4. Bond Pricing. A 6-year Circular File bond pays interest of $80 annually and sells for $950. What is 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. An AT&T 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

    YEAR Cashflow
    0 -950
    1 80
    2 80
    3 80
    4 80
    5 80
    6 1080
    YTM 9.12% (YTM is found out by IRR function of the excel)

    Coupon rate= Interest/Face value= 8/100= 8.00%
    Current yield= ...

    Solution Summary

    Bond Pricing and Bond Yields are investigated.