Price of Bond, $10K par, ann. coupon, 6.725% current yield

[venecia]

A $10,000 par bond with an annual coupon has only one year until maturity. It's current yield is 6.725% and its yield to maturity is 10%. What is the price of the bond?

Please help, as having problem finding the bond price. Thanks

 

[Deleted member 4993]

Re: Price of Bond

A $10,000 par bond with an annual coupon has only one year until maturity. It's current yield is 6.725% and its yield to maturity is 10%. What is the price of the bond?

Please help, as having problem finding the bond price. Thanks

If you are having trouble to start, please tell us the definitions of:

Current yield

Yield to maturity

Please show us your work, indicating exactly where you are stuck - so that we know where to begin to help you.

 

[venecia]

Re: Price of Bond

Current Yield:
The yield (return) of a bond at the current moment of the market.

Yield To Maturity:
The return or yield the bond holder will earn from the bond if holds to maturity date and base on the assumption that the promised coupon interest payments made are reinvested at the bond’s yield and is the same throughout.

But I'll need to know the coupon rate to calculate the price right. So i have problem finding the coupon rate.

 

[Denis]

Re: Price of Bond

Well, "yield to maturity = 10%" SEEMS to indicate one coupon of $1,000 left,
so with a year to go, then future value = 10000 + 1000 = 11000,
then purchase price = 11000 / 1.06725 = ?

Dunno...