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QUESTION 6 d) Evarex Ltd. has bonds which currently sell for $. 1,150 with an 11% coupon interest rate and at $. 1,000 par value.

QUESTION 6

d) Evarex Ltd. has bonds which currently sell for $. 1,150 with an 11% coupon interest rate and at $. 1,000 par value. The bonds pay interest annually and have 18 years to maturity. The company's tax rate is at 30%

Required:

i. The current yield of the bond

ii. The yield to maturity (YTM) of the bond.

iii. Explain the relationship between the calculated yield to maturity, current yield and coupon rate of the bond.

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