Question

Bond round yede Asume at the radio Management Corporation 11.000 per bond 6.800.coupon, matures on May 15,2027.hs p riegu 105.300 and audio matury (TM) 6.371. Go Hommonwerteblog queen What was the price of the bord What is the band's onyet is the bond selling aparata discount, or at a premium? Why? d. Compare the band's current yield calculated in part its YTM and explain why they offer The dollar price of the band is found to the nearest cont) b. The band's current yield is ..The bond selling d. Compare the band's o nly The yield to muy i n (Round to be decimal places) because the price cated in part to YTM and explain why they differ the current yuld case the former cludes $5.30 in w on today and the May 15, 2017 Bond maturity (elect from the drop down menus

Answer 1

a.
Price of bond	Par value*Current quote price
Price of bond	1000*105.339%
Price of bond	$1,053.39
b.
Current Yield	Coupon amount/Price
Coupon amount	1000*6.80%
Coupon amount	$68.00
Current Yield	68/1053.39
Current Yield	6.46%
c.
The dollar price of bond is higher than its par value and thus bond is trading at premium.
The bond is selling at premium because the price is higher than par value.
d.
The yield to maturity is lower than the current yield because the former includes $53.39 in price appreciation between today and the May 15, 2027 bond maturity.