Calculate the current yield on maturity

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Reference no: EM131218382

1. A $20,000 discount bond selling for $13,428 and maturing in five years has a yield to maturing of?

2. What is the return on a 4.45%, $25,000 coupon bond that was purchased one year ago for $25,355 and just sold for $24,925?

3. calculate the following: a bond with a coupon rate of 5.95% will mature in 9 years. The $20,000 par value instrument is currently selling for $19,475.

a. Calculate the current yield on maturity

b. Calculate the average capital gain or loss the owner will incur if the bond is held to maturity.

c. Calculate the approximate yield to maturity on this bond.

D. Briefly explain when the current yield is a good indicator of the yield to maturity.

Please show all work

Reference no: EM131218382

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