Suppose the following bond quotes for IOU Corporation appear in the financial page of today’s newspaper. Assume the bond has a face value of $2,000 and the current date is April 19, 2015. |
Company (Ticker) | Coupon | Maturity | Last Price | Last Yield | EST Vol (000s) | ||||||||||||
IOU (IOU) | 7.8 | Apr 19, 2028 | 103.66 | ?? | 1,835 | ||||||||||||
What is the yield to maturity of the bond (2 decimal places) and the current yeild (2 decimal places)? |
current date is April 19, 2015 and bon dmature in Apr 19, 2018, So number of year remains in maturity is 13 year.
Par Value = $2,000
Current Price = 103.66% of par
= 103.66% × $2,000
= $2,073.20
YTM of bond is calculated in excel and screen shot provided below:
YTM of bond is 7.36%.
Current Yield = Annual Coupon / Current price
= ($78 × 2) / $2,073.20
= 7.53%
Current Yield is 7.53%.
Get Answers For Free
Most questions answered within 1 hours.