EBK CFIN
EBK CFIN
5th Edition
ISBN: 9781305888036
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 6, Problem 16PROB
Summary Introduction

To calculate: Current yield and capital gain yield that is generated by the bond in year 3.

Introduction: Bond refers to the financial instruments that are issued to raise funds from the public for a fixed maturity period and a fixed interest rate is paid. The capital gain yield on the bond can be determined by subtracting the previous market price and the current market and dividing the arrived value by the previous market price of the bond.

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Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.7 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 5.05 percent. What is the dollar price of the bond?
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