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    Bond Yields- Current Yield and Yield to Maturity

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    An AT&T bond has 10 years until maturity, a coupon rate of 8 percent, and sells for $1,100. (Assume annual payments.)
    a) What is the current yield on the bond?
    b) What is the yield to maturity?

    Please include with your response the formulas required for this problems, as well as the detailed explanation for how to solve them.

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    Solution Preview

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    An AT&T bond has 10 years until maturity, a coupon rate of 8 percent, and sells for $1,100. (Assume annual payments.)
    a) What is the current yield on the bond?
    b) What is the yield to maturity?

    a) What is the current yield on the bond?

    Current yield = Annual Coupon payment/ Current Price=

    Annual Coupon ...

    Solution Summary

    The solution calculates Bond Yields- Current Yield and Yield to Maturity.

    $2.19