A $1,000 face value bond is selling for $1,016.36. The bond pays interest semian
ID: 2630999 • Letter: A
Question
A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is _____ percent and the coupon rate is _____ percent. (Points : 1)
5.86; 5.90
5.90; 6.00
5.90; 5.86
6.00; 5.90
6.00; 5.86
A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is _____ percent and the coupon rate is _____ percent. (Points : 1)
Explanation / Answer
A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is _____ percent and the coupon rate is _____ percent
YTm =5.48%
semi annual YTM (rate) = 2.74%
No of semi annuall period left to maturity (nper) = 3.5*2 = 7
PV = 1016.36
FV = 1000
Semi Annual Coupon Amount = pmt(rate,nper,pv,fb)
Semi Annual Coupon Amount = pmt(2.74%,7,-1016.36,1000)
Semi Annual Coupon Amount = $ 30
Coupon Rate = 30/1000 *2 = 6%
Current Yield = 30/1016.36 *2 = 5.90%
Answer
Current Yield = 5.90%
Coupon Rate = 6%
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