Transcribed Image Text
A bond with a coupon rate of 12.5% per year (payable semiannually) has a life of 7.5 years and a yield to maturity of 14%.What is the bond's current yield? Assume the bond is fairlypriced.Assume the bond has a par value of $1000Semi-annual coupon -(12.5%/2)(1000) = $62.50Semi-annual discount rate is yield to maturity/2 or 14%/2 =7%So, the fair bond price is:Coupon$62.50rate7%n15Fv1000$931.69PVThe annual coupon on this bond is 12.5% (1000) = $125Current yield $125/$931.69 = 13.416%Find the current yield of the bond in the problem aboveassuming the yield to maturity is 9%PLEASE SHOW WORK IN EXCEL
Other questions asked by students
Basic Math
Q
1a. Janae is diagnosed with iron deficiency anemia. In terms of this complete blood count, what...
Medical Sciences
Medical Sciences
Accounting
Accounting
Accounting