Yield to Maturity and Current Yield You just purchased a bond that matures in 5 years....

Yield to Maturity and Current Yield

You just purchased a bond that matures in 5 years. The bond has a face value of $1,000 and an 8% annual coupon. The bond has a current yield of 8.21%. What is the bond's yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. The answer is a percentage (%).

Expert Solution

Step-1:Calculation of current price

Current Price	=	Annual coupon	/	Current Yield
	=	$ 80.00	/	8.21%
	=	$ 974.42

Working:

Annual coupon	=	Face Value	*	Coupon rate
	=	$ 1,000.00	*	8%
	=	$ 80.00

Step-2:Calculation of yield to maturity

Yield to maturity		=rate(nper,pmt,pv,fv)
		= 8.65%


Working:

nper	=	5
pmt	=	$ 80.00
pv	=	$ -974.42
fv	=	$ 1,000.00

jeff jeffy answered 1 year ago

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