Question

A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 11%, and has a yield to maturity of 12%. The current yield on this bond
I need this to be written step by step Please. If you got a number from somewhere I need to know where it's from.

Answer 1

Par/Face value	1000
Coupon rate	0.11
Annual Coupon	110
Present Value = Future value/ ((1+r)^t)
where r is the yield to maturity that is 12% and t is the time period in years.
price of bond = sum of present value of future cash flows.
t	1	2	3	4	5	6	7	8	9	10	11	12
future cash flow	110	110	110	110	110	110	110	110	110	110	110	1110
present value	98.21	87.69	78.30	69.91	62.42	55.73	49.76	44.43	39.67	35.42	31.62	284.91
price/sum of present values	938.06
The current price of the bond is 938.06
The current yield of the bond = (annual coupon)/current price
The current yield of the bond = 110/938.06
The current yield of the bond = .117263.
The current yield of the bond is equal to 11.73%.