Answer:
the current yield to maturity of the bond is 5.31%
Explanation:
The computation of the yield to maturity is shown below:
Given that
Future value = $1,000
Present value = $860
NPER = (20 - 4) × 2 = 16
PMT = $1,000 × 4% ÷ 2 = $20
The formula is shown below:
= RATE(NPER;PMT;-PV;FV;TYPE)
The present values comes in negative
After applying the above formula, the yield to maturity is
= 2.6548% × 2
= 5.31%
Hence, the current yield to maturity of the bond is 5.31%
