Compute the current yield on bond

Reference no: EM13753611

An investor must choose between two bonds: Bond A pays $72 annual interest and has a market value of $925. It has 10 years to maturity. Bond B pays $62 annual interest and has a market value of $910. It has two years to maturity.

Compute the current yield on Bond A.

Compute the current yield on Bond B

A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on Bond A is 8.33 percent. What is the yield to maturity on Bond B?

Reference no: EM13753611

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