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Finance : Bond Pricing and Bond Yields

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?

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.