Respuesta :
Answer:
Yield to Maturity = 0.0493 or 4.93%
Current Yield = 0.0518 or 5.18%
Explanation:
Assuming that the face value of the bond is $1000
The yield to maturity can be calculated using the following formula,
Yield To Maturity = [C + (F - P) / n] / (F + P) / 2
Where,
C = Coupon Payment
F = Face Value
P = Present value
N = Number of years to maturity
The coupon payment here is 1000 * 0.062 = $62
The Yield to Maturity = [62 + (1000 - 1196) / 25] / (1000 - 1196) / 2
Yield to Maturity = 0.0493 or 4.93%
Current Yield is simply calculated by dividing the coupon payment by the preset value of a bond.
Current Yield = 62 / 1196 = 0.0518 or 5.18%
Answer:
4.93% YTM and Current Yield is 5.18%
Explanation:
n = 25
P =$1196
FV = $1000
C = 6.2*1000 =$62
YTM = ?
Formular = C + F - P/n ÷ F + P / 2
=62+1000-1196/25 ÷ 1000+1196/2
=0.0493/4.93%
The current yield is given by current price and coupon payment
62/1196 = 0.0518/5.18%
