A 3.70 percent coupon municipal bond has 15 years left to maturity and has a price quote of 95.65. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and it has a par value of $5,000.) Compute the bond's current yield. Compute the yield to maturity. Compute the taxable equivalent yield (for an investor in the 30 percent marginal tax bracket). Compute the yield to call. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Current yield Yield to maturity % % Equivalent taxable yield % Yield to call %

A 3.70 percent coupon municipal bond has 15 years left to maturity and has a price quote of 95.65. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and it has a par value of $5,000.) Compute the bond's current yield. Compute the yield to maturity. Compute the taxable equivalent yield (for an investor in the 30 percent marginal tax bracket). Compute the yield to call. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Current yield Yield to maturity % % Equivalent taxable yield % Yield to call %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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Question

A 3.70 percent coupon municipal bond has 15 years left to maturity and has a price quote of 95.65. The bond can be called in four
years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and it has a par value of
$5,000.)
Compute the bond's current yield.
Compute the yield to maturity.
Compute the taxable equivalent yield (for an investor in the 30 percent marginal tax bracket).
Computé the yield to call.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Current yield
%
Yield to maturity
%
Equivalent taxable yield
%
Yield to call
%

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