P6-11 Current yicld and yicld to maturity An annual coupon bond has a $1,000 face valuc, coupon rate of 5%, will mature in 10 ycars, and currently sells for $810.34.

a. What is the yield to maturity of the bond? b. What is the current yield of the bond?

c. Why docs the current yicld differ from the yicld to maturity?

d. Onc year latcr, the market rates have increased to 8%.

Assume that you have just received a coupon payment and you sold the bond. If you sold your bond at its intrinsic valuc, what would be the rate of return on your investment?