Rolling Company bonds have a coupon rate of 6.80 percent, 22 years to maturity, and a...

Rolling Company bonds have a coupon rate of 6.80 percent, 22 years to maturity, and a current price of $1,226. What is the YTM? The current yield? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Expert Solution

Annual coupon=1000*6.8%=$68

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[68+(1000-1,226)/22]/(1000+1,226)/2

=5.07%(Approx)

Current yield=Annual coupon/Current price

=68/1,226

=5.55%(Approx)

jeff jeffy answered 2 years ago

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