Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 7.4% with semiannual payments of $37, and a par value of $1,000. The price of each bond in the issue is $1,200.00. The bond issue is callable in 5 years at a call price of $1,074.

What is the bond's current yield? Round your answer to two decimal places. Do not round intermediate calculations.

Current yield is 6.17%

YTD is 5.43%

YTC is 4.26%

Explanation:

Tenor: 15 years

-> number of payment (NPer) is 30 ( = 15 years * 2 for semiannual)

Coupon rate: 7.4%

- > semiannual payments (PMT) : $37 = ($1000*7.4%/2)

Future value (FV) : $1000

Present value (PV) : $1200

Current yield = annual coupon / current price = $37*2/$1200 = 6.17%

Extra:

We use excel to calculate yield to date (YTD) or nominal yield:

= Rate (Nper, PMT, - PV, FV) = Rate (30,37,-1200,1000) = 2.717% semiannual

-> annual rate is 5.43%

The bond issue is callable in 5 years at a call price of $1,074, then FV is $1074

Yield to call = rate (10,37,-1200,1074) = 2.13% semiannual

-> annual rate is 4.26%