You just purchased a bond that matures in 15 years. The bond has a face value of $1,000 and has an 8% annual coupon. The bond has a current yield of 8.37%. What is the bond's yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

7.48%

Explanation:

Current yield is the ratio of coupon receipt on a bond to the current market price of the bond. It is rate of interest income received from the bond to the current market price of the bond.

Face value = F = $1,000

Coupon payment = $1,000 x 8% = $80

Selling price = P = $1,050

As we know

Current yield = Coupon payment / Current market price

8.37% = $80 / Current Market value

Current Market value = $80 / 8.37%

Current Market value = $955.79

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity. it is long term return which is expressed in annual rate.

Number of payment = n = 13 years

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

Yield to maturity = [ $80 + ( 1000 - 1050 ) / 15 ] / [ (1,000 + 1050 ) / 2 ]

Yield to maturity = 7.48%

88 because 4 plus 4 equals 8. 40 plus 40 equals 80. 80 plus 8 equals 88

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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