Suppose the following bond quote for IOU Corporation appears in the financial pa

Question

Suppose the following bond quote for IOU Corporation appears in the financial page of today%u2019s newspaper. Assume the bond has a face value of $1,000, and the current date is April 15, 2010.

What is the yield to maturity of the bond? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What is the current yield? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Company
(Ticker) Coupon Maturity Last
Price Last
Yield EST Vol
(000s) IOU (IOU) 10.05 Apr 15, 2027 91.585 ?? 1,832

Explanation / Answer

Hi,

Please find the correct answers as follows:

Part A:

YTM = rate(34, 100.5/2, -915.85, 1000) = 5.58%*2 = 11.16%

Part B:

Current Yield = 100.5/915.85*100 = 10.97%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.