Calculate the coupon rate and current yield

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Reference no: EM131984182

On January 1, 2015 and your broker calls you with a District of Columbia Revenue Bond with a 6.875 % coupon issued on 1/1/2015, maturing in 20 years on 12/31/35. The face value is $1,000 and the bond is selling for $1,250. Interest is paid at the end of each calendar year.

(a) Calculate the yield to maturity (using the excel file on the course web page or a financial calculator.

(b) Calculate the yield to maturity using the approximation formula.

(d) Calculate the current yield.

Reference no: EM131984182

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