Question

Find the yield to maturity for a 15-year, 8% annual coupon rate, $1,000 par value bond if the bond sells for $1,218 currently? We assume that interest is paid on this bond annually.

		2.90%
		5.79%
		6.64%
		6.86%

Using the information from above, calculate the bond’s current yield.

		6.20%
		6.57%
		6.80%
		7.18%

Using the information from Question 43 and 44, calculate the bond’s capital gain yield.

		-0.78%
		0.78%
		6.22%
		6.57%

Answer 1

First:

Calculator
Inputs:
PV	(1,218.000)
PMT	80.00
FV	1,000.00
N	15
Output:
I/Y = IRR	5.786603%

Yield to maturity is 5.79%

Current yield = 80/1218 = 6.57%

Capital gain yield = 5.79% - 6.57%

-0.78%

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