Homework Answers
Suppose the face value of the bond=$1000
Coupon rate=6.6%
Coupon payment=(Coupon rate)*(Face value)=6.6%*1000=66
Time period=23 years
Present value or current price=$1216
We can determine the value of YTM using excel
So, the value of YTM=5.00%
Current yield=Annual coupon payment/Current value of the
bond
Current yield=66/1216=0.054276316 or 5.43%
*Rounded to two decimal places)
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