Use the following bond quote:

Company	Symbol	Coupon	Maturity	Moody’s, S&P, Fitch Rating	High	Low	Last	Change	Yield%
Int’l Systems	ISU.GO	6.850%	May 2032	Baa2/BBB/BB−	102.817	91.865	93.231	1.650	7.482%
What is the yield to maturity of the bond?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.



What is the current yield of the bond?

### Given Bond Quote Information:
- **Coupon Rate** = 6.850%
- **Maturity** = May 2032
- **Last Price** = 93.231
- **Change in Price** = 1.650
- **Yield** = 7.482%

#### 1. **Yield to Maturity (YTM) Calculation:**
To calculate the **Yield to Maturity (YTM)**, we use the following formula:

\[
P = \frac{C}{(1 + YTM)^1} + \frac{C}{(1 + YTM)^2} + \dots + \frac{C + F}{(1 + YTM)^n}
\]

Where:
- \( P \) = Current price of the bond (Last Price) = 93.231
- \( C \) = Annual coupon payment = Coupon Rate \(\times\) Face Value (assumed to be 100) = \( 6.850 \% \times 100 = 6.850 \)
- \( F \) = Face value (assumed to be 100)
- \( n \) = Number of years to maturity = May 2032 - current year
- \( YTM \) = Yield to maturity (what we need to calculate)

We will solve for \( YTM \), but it typically requires iterative numerical methods, so we can approximate by using the given information.

The bond's quoted yield is \( 7.482\% \), and since the price is close to par value (around 93), this is approximately the **Yield to Maturity**.

Thus, the **YTM** ≈ 7.482%.

#### 2. **Current Yield Calculation:**
The **Current Yield** is calculated using the formula:

\[
\text{Current Yield} = \frac{\text{Annual Coupon Payment}}{\text{Current Price}} \times 100
\]

Where:
- Annual Coupon Payment = \( 6.850 \) (from the coupon rate)
- Current Price = \( 93.231 \)

\[
\text{Current Yield} = \frac{6.850}{93.231} \times 100 = 7.347\%
\]

### Summary:
- **Yield to Maturity (YTM)** ≈ 7.482%
- **Current Yield** = 7.347%

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Would you like further details or clarification?

### Related Questions:
1. What factors influence the yield to maturity of a bond?
2. How does bond rating affect its yield and price?
3. How would the YTM change if the bond price increased to par value?
4. What is the difference between nominal yield, current yield, and YTM?
5. How does the time to maturity impact the volatility of a bond's price?

#### Tip:
The **YTM** incorporates both interest payments and any gain or loss if the bond is held until maturity, while the **current yield** only considers the coupon payments in relation to the current bond price.

What is the yield to maturity of the bond? What is the current yield of the bond?

Understand how to calculate the Yield to Maturity (YTM) and Current Yield of a bond using a detailed example. This problem covers essential finance concepts such as bond pricing and yield calculation, suitable for college-level students.

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