Annual coupon=1000*7.45%=$74.5
Current price=Annual coupon*Present value of annuity factor(8.82%,5)+1000*Present value of discounting factor(8.82%,5)
=74.5*3.9078857+1000*0.655324481
=$946.461966(Approx)
Current yield=Annual coupon/Current value
=74.5/946.461966
=7.87%(Approx).
NOTE:
1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=74.5[1-(1.0882)^-5]/0.0882
=74.5*3.9078857
2.Present value of discounting factor=1000/1.0882^5
=1000*0.655324481
A coupon bond pays annual interest, has a par value of $1,000, matures in 5 (five)...
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