A BCE bond has 11 years until maturity and a coupon rate of 6.9% payable annually, and sells for $1,070. The face value of the bond is $1,000.a. What is the current yield on the bond? *(Round your answer to 2 decimal places.)*Current yield: _______%b. What is the yield to maturity? *(Round your answer to 2 decimal places.)*Yield to maturity: _______%*Explanation for Educational Website:*This text presents a bond investment scenario. When assessing bonds, two key metrics are considered: the current yield and the yield to maturity. - **Current Yield** refers to the annual income (interest or dividends) divided by the current price of the security. It provides a snapshot of the income return on a bond if purchased at its current price.- **Yield to Maturity (YTM)** is a more comprehensive measure, representing the total return anticipated on a bond if it is held until it matures. YTM accounts for all coupon payments received over the life of the bond and any capital gain or loss incurred.

face value = $1000n= 11 yearscoupon rate = 6.9%price =$1070

A BCE bond has 11 years until maturity and a coupon rate of 6.9% payable annually, and sells for $1,070. Face value of the bond is $1,000. a. What is the current yield on the bond? (Round your answer to 2 decimal places.) Current yield % b. What is the yield to maturity? (Round your answer to 2 decimal places.) Yield to maturity %

A BCE bond has 11 years until maturity and a coupon rate of 6.9% payable annually, and sells for $1,070. Face value of the bond is $1,000. a. What is the current yield on the bond? (Round your answer to 2 decimal places.) Current yield % b. What is the yield to maturity? (Round your answer to 2 decimal places.) Yield to maturity %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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