Remember: bond interest payments are semi-annual, and maturity and face value are $1,000 Capital One has...

Question

Question

Remember: bond interest payments are semi-annual, and maturity and face value are $1,000

Capital One has a 7-year, 8.9% bond issue selling for $991.78.

business finance

Answer 1

Answer #1

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What is the yield to maturity on this bond?

Yield of Bond = 9.06%

Calculated using RATE funtion

Is the bond selling at a premium or a discount?

Answer is Discount

price of the bond is less than the face value hence its at discount

What is the current yield on this bond?

Current Yield =Coupon payment/ value of bond =$89/991.78=8.97%

Answer 2

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