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Workman Software has 10.2 percent coupon bonds on the market with 16 years to maturity. The bonds make semiannual payments and currently sell for 137.8 percent of par.   a. What is the current yield on the bonds?       multiple choice 1 7.77% 7.40% 8.27% 0.17% b. The YTM?       multiple choice 2 6.57% 10.70% 3.19% 6.39%

Workman Software has 10.2 percent coupon bonds on the market with 16 years to maturity. The bonds make semiannual payments and currently sell for 137.8 percent of par.   a. What is the current yield on the bonds?       multiple choice 1 7.77% 7.40% 8.27% 0.17% b. The YTM?       multiple choice 2 6.57% 10.70% 3.19% 6.39%

Essentials Of Investments
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
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Workman Software has 10.2 percent coupon bonds on the market with 16 years to maturity. The bonds make semiannual payments and currently sell for 137.8 percent of par.

 

a. What is the current yield on the bonds?
   
  multiple choice 1
  • 7.77%
  • 7.40%
  • 8.27%
  • 0.17%
b. The YTM?
   
  multiple choice 2
  • 6.57%
  • 10.70%
  • 3.19%
  • 6.39%

c.The effective annual yield?   multiple choice 3

  • 6.49%
  • 0.07%
  • 6.82%
  • 6.36%

 

Expert Solution
Step 1

Bonds are debt instruments that companies issue to raise funds.

Companies pay fixed periodic coupons to the bond holders.

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