Posted by **Mel** on Tuesday, September 18, 2007 at 7:14pm.

Current yield and yield to maturity

A bond has a $1,000 par value, 10 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 (YTM)?

c. Assume that the yield to maturity remains constant for the next 3 years. What will the price be 3 years from today?

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