Graystone bonds have a maturity value of $1,000. The bonds carry a coupon rate of 12 percent. Interest is paid
semiannually. The bonds will mature in nine years. If the current market price is $976.50,
a. what is the yield to maturity on the bond?
b. what is the current yield on the bond?
a. Yield to maturity = 12.44%
b. Current yield = $120/$976.50 = 12.29%
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