nr.un Will Parrino, Fundamentals of Corporate Finance, 3e FINANCIAL MANAGEMEN Gr

Question

nr.un Will Parrino, Fundamentals of Corporate Finance, 3e FINANCIAL MANAGEMEN Gradebook ORION Downloadable eTextbook R VERSION BACK NEXT Problem 8.10 Rudy Sandberg wants to invest in four-year bonds that are currently priced at $865.39. These bonds have a coupon rate of 6.5 percent and make semiagnual coupon payments. What is the current market yield on this bond? (Round intermediate calculations to 5 decimal places, e 1.25145 and final answer to 2 decimal places, e.g. 15.25%.) Current market yield By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Question Attempts: 0 of 3 used E SAVE FOR LATER Earn Maximum Points available only if you answer this question correctly in two attempts or less

Explanation / Answer

Current market yield = Annual Dividend / Bond Price

Annual Dividend = 6.5% x 1000 = 65

=> Current market yield = 65 / 865.39 = 7.51%

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