A 2.50 percent coupon municipal bond has 12 years left to maturity and has a price quote of 98.45. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.) 1). Compute the bond's current yield. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2). Compute the yield to maturity. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3). Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 4). Compute the yield to call. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A 2.50 percent coupon municipal bond has 12 years left to maturity and has a price quote of 98.45. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.) 1). Compute the bond's current yield. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2). Compute the yield to maturity. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3). Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 4). Compute the yield to call. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A 2.50 percent coupon municipal bond has 12 years left to maturity and has a price quote of 98.45. The bond
can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are
semiannual and a par value of $5,000.)
1). Compute the bond's current yield. (Do not round intermediate calculations. Round your answer to 2
decimal places.)
2). Compute the yield to maturity. (Do not round intermediate calculations. Round your answer to 2 decimal
places.)
3). Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
4). Compute the yield to call. (Do not round intermediate calculations. Round your answer to 2 decimal
places.)
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