A bond with 1,000 par value, has 14 years left to maturity has a coupon rate...
A bond with 1,000 par value, has 14 years left to maturity has a coupon rate of 10% with semi-annual coupon payments. The current yield to maturity is 14.5%. What is the current yield?
A) 12.78%
B) 11.15%
C) 13.64%
D) 11.95%
E) 14.51%
Homework Answers
Bond Par Value = $1,000
Time to Maturity = 14 years
Coupon Rate = 10% semi-annually
YTM = 14.50%
Calculating Bond Value,
PV = [FV = 1,000, T = 28, PMT = 50, I = 0.1450/2]
PV = $733.38
Current Yield = 100/733.38
Current Yield = 13.64%
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