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A bond with a par value of $1,000 and an annual coupon has a yield to...

A bond with a par value of $1,000 and an annual coupon has a yield to maturity of 5.60% and a current price of $975. If the bond has 18 years to maturity, what is its current yield?

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Answer #1

A bond with a par value of $1,000 (FV) and an annual coupon has a yield to maturity of 5.60% (RATE) and a current price of $975 (PV). If the bond has 18 years (NPER) to maturity, what is its current yield?

Using the EXCEL Formula for finding the annual Payments (PMT)

PMT(RATE,NPER,-PV,FV,0) = PMT(5.60%,18,-975,1000,0) = $ 53.76 per year;

Current Yield = $ 53.76 / $1000 = 5.38%

Answer: 5.38%

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