Bonds issued by XYZ have a par value of $1000, were priced at $960 1 year...
Bonds issued by XYZ have a par value of $1000, were priced at $960 1 year ago and are priced at $940 today. The bonds pay annual coupons and just made a coupon payment. If the bonds had a percentage return over the past year ( from 1 year ago to today) of 17.00%, then what is the current yield of the bonds today?
Homework Answers
Percentage return = (Ending value - begining value + coupons) / beginning value
0.17 = (940 - 960 + coupons) / 960
163.2 = 940 - 960 + coupons
183.2 = coupons
Current yield = (Annual coupon / price) * 100
Current yield = (183.2 / 940) * 100
Current yield = 19.49%
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