Current yield and yield to maturity:


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A bond has $1,000 par value, 10 years to maturity, a 7 percent 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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