Which of the following bonds offers the highest current yield? a. A(n) 8.10%, 20-year bond quoted...
Which of the following bonds offers the highest current yield? a. A(n) 8.10%, 20-year bond quoted at 100.970. b. A(n) 13.50%, 15-year bond quoted at 168.284. c. A(n) 4.05%, 18-year bond quoted at 50.485.
The current yield of the bond in part a is __%
The current yield of the bond in part b is __%
The current yield of the bond in part c is __%
Which of the three bonds offers the highest current yield?
Homework Answers
Current yield = Annual dividend/ Price
The current yield of the bond in part a is 8.02%
CY = 8.1%*100/100.97 = 8.02%
The current yield of the bond in part b is 8.02%
CY = 13.5%*100/168.284 = 8.02%
The current yield of the bond in part c is 8.02%
CY = 4.05%*100/50.485= 8.02%
Which of the three bonds offers the highest current yield?
None. All are equal.
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