| A bond with face value $1,000 has a current yield of 6.6% and a coupon rate of 8.6%. |
| a. | If interest is paid annually, what is the bond’s price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Bond price | $ |
| b. | Is the bond’s yield to maturity more or less than 8.6%? | ||||
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References
a)
Current yield =Coupon payments/Bond price
Bond price =86/6.6%
Bond price =1303.03
b)
The bond is selling at a premium, that means yield to maturity is less than the coupon rate of 8.6%
A bond with face value $1,000 has a current yield of 6.6% and a coupon rate...