Suppose the following bond quotes for loU Corporation appear

Suppose the following bond quotes for loU Corporation appear in the financial page of today\'s newspap Assume the bond has a face value of $1,000 and the current date is April 19, 2012 mpany EST Vol= (Ticker)Coupon Maturity Last Price Last Yield (000s) U) 62 Apr 19, 2028 108.96 7? 1.827 What is the yield to maturity of the bond? (Round your answer to 2 decimal places. (e-g. 32.16) YTM What is the current yield? (Round your answer to 2 decimal places. (e.g. 32.16)) Current yield

Solution

Using financial calculator BA II Plus - Input details:

#

FV = Future Value =

-$1,000.00

PV = Present Value = -Quoted price % x Face Value = 108.96%*1000

$1,089.60

N = Total number of periods = Years x frequency = 16 =

16

PMT = Payment = Coupon / frequency =

-$62.00

CPT > I/Y = Rate or YTM =

                 5.3524

YTM = 5.35%

[YTM = 5.3524/100 ; to convert in %)

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Current Yield = |PMT| / PV = 62/1089.60 = 5.69%

Using financial calculator BA II Plus - Input details:	#
FV = Future Value =	-$1,000.00
PV = Present Value = -Quoted price % x Face Value = 108.96%*1000	$1,089.60
N = Total number of periods = Years x frequency = 16 =	16
PMT = Payment = Coupon / frequency =	-$62.00
CPT > I/Y = Rate or YTM =	5.3524