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’s newspaper. Assume the bond has a face value of $1,000, and the current date is April 15, 2013.

What is the yield to maturity of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What is the current yield? (Do not round 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) 7.30 Apr 15, 2041 91.725 ?? 1,846

Explanation / Answer

interest 73 current market price 91.725 years to maturity 28 Yield to maturity interest + (redemption value-current market price)/years to maturity /   (redemption value+current market price)/2 0.193159 19.31593 percent Interest (redemption value-current market price)/years to maturity (redemption value+current market price)/2 73 32.43839 545.8625 current Yiled interest/current market price 79.58572 percent

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