Practice: Please verify my solution below. I used a financial calculator, so if you use Esxel, please show the calculations.

***assume this corporate bond that pays 2x annually

Part a: What is the YTM of this corporate bond - 20 year bond issued 5 years ago, interest rate of 4%, you just purchased it for $1,062.50?

Part b: What is this bond's current yield

Part a: YTM = I (enter values into financial calculator and solve for I)

N = 15*2 = 30

I/Y = unknown > Answer 1.73111*2 = 3.46 > YTM = 3.46%

PMT = (.04*1000) = 40*2 = 20

PV = -1062.50

FV = 1000

Part b: CY = PMT/PV = 20/1062.5 = 0.0188*100 = 1.88%