Coupon rate, current yield and yield to maturity
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Bond Pricing. A 6-year Circular File bond pays interest of $80 annually and sells for $950. What are its coupon rate, current yield and yield to maturity?
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Solution Summary
The solution explains how to calculate the coupon rate, current yield and yield to maturity for a bond.
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Coupon rate is the annual interest rate in percentage paid by the bond. The bond pays $80 annually in interest. The par value of the bond is $1,000. The coupon rate is 80/1,000 = 8%
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