An 8% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 8.2895%. What are the bond's price and YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answer for the bond's price to the nearest cent and for YTM to two decimal places. Bond’s price: $ YTM: %
An 8% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 8.2895%. What are the bond's price and YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answer for the bond's price to the nearest cent and for YTM to two decimal places. Bond’s price: $ YTM: %
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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An 8% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 8.2895%. What are the
Bond’s price: $
YTM: %
Expert Solution
Step 1
The proportion of the bond price that is realized as the coupon payment in one year is called the current yield of the bond. The bond price can be calculated by dividing the total annual coupon with the current yield.
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