**Transcription:**Technical Sales, Inc. has 6.6 percent coupon bonds on the market with 9 years left to maturity. The bonds make semiannual payments and currently sell for 92.5 percent of par. What is the effective annual yield?---**Explanation:**This image contains a financial problem related to bonds, specifically discussing coupon bonds issued by Technical Sales, Inc. The bonds offer a 6.6% annual coupon rate and have 9 years remaining until they mature. The price of the bonds is currently 92.5% of the par value, indicating that they are selling at a discount. The question aims to determine the effective annual yield, which is a measure of the actual annual return on the bond, accounting for the compounding of interest payments. This calculation will involve the semiannual payment structure of the bonds.

Effective Annual Yield (EAY) is a financial concept used to calculate the actual annual rate of…

Technical Sales, Inc. has 6.6 percent coupon bonds on the market with 9 years left to maturity. The bonds make semiannual payments and currently sell for 92.5 percent of par. What is the effective annual yield?

Technical Sales, Inc. has 6.6 percent coupon bonds on the market with 9 years left to maturity. The bonds make semiannual payments and currently sell for 92.5 percent of par. What is the effective annual yield?

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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Question

**Transcription:**

Technical Sales, Inc. has 6.6 percent coupon bonds on the market with 9 years left to maturity. The bonds make semiannual payments and currently sell for 92.5 percent of par. What is the effective annual yield?

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**Explanation:**

This image contains a financial problem related to bonds, specifically discussing coupon bonds issued by Technical Sales, Inc. The bonds offer a 6.6% annual coupon rate and have 9 years remaining until they mature. The price of the bonds is currently 92.5% of the par value, indicating that they are selling at a discount. The question aims to determine the effective annual yield, which is a measure of the actual annual return on the bond, accounting for the compounding of interest payments. This calculation will involve the semiannual payment structure of the bonds.

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