Question

Suppose the following bond quote for IOU Corporation appears in the financial page of today's newspaper. Assume the bond has a

face value of $2,000, and the current date is April 19, 2022.
Company
(Ticker)
IOU (IOU)
Coupon
Maturity
7.35 April 19, 2037
a. Yield to maturity
b. Current yield
a. What is the yield to maturity of the bond?
Note: Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b. What is the current yield?
Note: Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Answer 1

To calculate the yield to maturity (YTM) and current yield of the IOU Corporation bond, we need additional information such as the bond's current market price.

YTM is the annual rate of return an investor can expect to receive if the bond is held until maturity, considering its current market price, face value, and coupon payments. Current yield, on the other hand, is calculated by dividing the annual interest payment (coupon) by the current market price of the bond.

If you provide the market price of the bond, I can guide you through the calculations. Without that information, it's not possible to determine the exact YTM and current yield. Please share the bond's current market price, and I'll help you with the calculations.