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. Company (Ticker):IOU (IOU) Coupon: 9.85 Maturity:Apr 15, 2023 Last Price:91.545 Last Yield :?? EST Vol (000s):1,828 Requirement 1: 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).) Yield to maturity % Requirement 2: What is the current yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Current yield

Explanation / Answer

use rate formuale in excle to find last yied

=rate(nper,pmt,pv,fv,type)

nper=10 years

pmt=9.85%*1000=$98.5

pv=-91.545

fv=1000

=RATE(10,98.5,-91.545,1000,0,1)

=108.3%

Current yield= coupon payment/ present vlaue of bond

=98.5/91.545

=107.6%

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