Question

A bond has a $l000 par value, l0 years to maturity, a 7 percent annual coupon, and sells for $985.
a. What is its current yield?
b. What is its yield to maturity
c. Assuke that the yield to maturity remains constant for the next 3 years, what will the price be 3 years from today?
a. 7.11%
b. N = 10, PV = -985, PMT = 70, FV = 1000

YTM = 7.2157% = 7.22%

c. N = 7, I/YR = 7.2157, PMT = 70, FV = 1000

PV = $988.46

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