Time Warner has bonds that are selling for $1,199. The coupon interest rate on the bonds...
Time Warner has bonds that are selling for $1,199. The coupon interest rate on the bonds is 8.10 percent and they mature in 23 years. What is the yield to maturity on the bonds? What is the current yield?
a. The yield to maturity on the bond is
%.
(Round to two decimal places.)
b. The current yield is
%.
(Round to two decimal places.)
Homework Answers
a.
The following inputs either in excel or financial calculator:
| PV | 1199 | |
| PMT | 81 | [1000*8.1%] |
| Nper | 23 | |
| FV | 1000 |
Formula: Rate ( Nper, pmt, -pv, fv)
Output : 6.42%
YTM = 6,.42%
b. Current yield =Coupon payment / Current market price = 81/ 1199 = 6.76%
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Time Warner has bonds that are selling for $1,199. The coupon
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