Final answer:
The current yield on the bonds is 7.02%, the yield to maturity is approximately 6.89%, and the effective annual yield is 7.16%.
Step-by-step explanation:
To calculate the current yield on the bonds, divide the annual coupon payment by the market price of the bond. In this case, the annual coupon payment is 7.6% of the face value, which is 0.076 * $1000 = $76. The market price of the bond is 108.25% of the face value, which is 1.0825 * $1000 = $1082.50. So, the current yield is $76 / $1082.50 = 0.0702, or 7.02%.
To calculate the yield to maturity (YTM), you need to solve for the discount rate that makes the present value of the bond's cash flows equal to its current market price. You can use a financial calculator or spreadsheet software to find the YTM, or you can use trial and error to approximate it. In this case, the YTM is approximately 6.89%.
The effective annual yield takes into account the compounding of interest. To calculate it, use the formula: (1 + (annual yield / number of compounding periods)) ^ number of compounding periods - 1. In this case, since the bonds make semiannual payments, there are 2 compounding periods per year. So, the effective annual yield is (1 + (0.0702/2))^2 - 1 = 0.0716, or 7.16%.