Please show all work Carries Clothes Inc has a fiveyear bo

***** Please show all work *****

Carrie\'s Clothes, Inc. has a five-year bond outstanding that pays $60 annually. The face value of each bond is $1,000, and the bond sells for $890.

a. What is the bond\'s coupon rate?

b. What is the current yield?

c. What is the yield to maturity?

Solution

a) bond\'s coupon rate = 1000/60 = 100/6 = 16.66%

b) current yield = (16.66*1000)/890 = 18.7265

c) YTM = 20.37 %