Question

Suppose the following bond quote for IOU Corporation appears in the financial page of today’s newspaper. Assume the bond has a face value of $1,000, and the current date is April 15, 2016.

Company (Ticker)	Coupon	Maturity	Last Price	Last Yield	EST Vol (000s)
IOU (IOU)	7.70	Apr 15, 2039	91.705	??	1,844

What is the yield to maturity of the bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Yield to maturity             %
  
What is the current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
  
Current yield   

how do i solve this?

Answer 1

Yield to Maturity = 8.53%

Using financial calculator BA II Plus - Input details:	#
FV = Future Value =	$1,000
PV = Present Value of Bond = 91.705% x -FV =	-$917.05
N = Total number of remaining payment periods =	23
PMT = Payment = Coupon =	$77.00
CPT > I/Y = Rate =	8.5349
Convert Yield in annual and percentage form = Yield / 100 =	8.53%

Current Yield = 8.40%

Current yield = Coupon / Present value of bond = 77 / 917.05 =

8.40%