Evaluating the yields


Assume you purchased a corporate bond at its current market price of $850 on January 2, 2002. It pays 9 percent interest and it will mature on December 31, 2011, at which time the corporation will pay you the face value of $1,000.

a. Determine the current yield on your bond investment at the time of purchase.

b. Determine the yield to maturity on your bond investment.

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Finance Basics: Evaluating the yields
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