Question 1 (25 marks) Explain how would you go about computing in practice the following yields on bond investment Illustrate each with an example Current yield Promised yield to maturity Yield to call Realized or horizon yield (8 marks) Briefly describe what are bond ratings and explain their purpose marks)

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Question 1 (25 marks) Explain how would you go about computing in practice the following yields on bond investment. Illustrate each with an example. Current

Question 1 (25 marks)

Explain how would you go about computing in practice the following yields on bond investment. Illustrate each with an example.

Current yield
Promised yield to maturity
Yield to call
Realized or horizon yield

(8 marks)

Briefly describe what are bond ratings and explain their purpose.

marks)

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