Current price of the bond: Price of the bond is the present value of the future cash flows received from the bond. Current yield: It is the ratio of the coupon payment to current price of the bond. It is used to measure the current rate of return earned by the investor from the bonds. Capital gain : Capital gain is the difference between the yield to maturity and current yield. _________________________________ Calculate the current price of the bond as follows: Current price = Coupon × ( 1 − ( 1 + Rate ) − Periods ) Rate + Face value ( 1 + Rate ) Periods Calculate the current yield as follows: Current yield = Coupon Current price Calculate the capital gain yield as follows: Capital gain yield = Yield to maturity − Current yield D system has outstanding bonds that has face value of $1000 and coupon rate of 7%. Interest is paid semiannually on this bond. Yield to maturity is 10% and remaining time to maturity is 11 years

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43 -ACC-121-71: CH 04 HW-X Question 7 - CH 04 HW - Exercise X ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fconnect.mheducation.com%252Fcon vo Support L Lenovo McAfee Dashboard | Piedm... Information System... My Shelf | Brytewav... My Shelf | Bryteway... Exercises & Problems Saved Help Sa Scribners Corporation produces fine papers in three production departments-Pulping, Drying, and Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its process costing system. Data for March for the Drying Department…

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Chapter 6, Problem 17PROB

Summary Introduction

Current price of the bond:

Price of the bond is the present value of the future cash flows received from the bond.

Current yield: It is the ratio of the coupon payment to current price of the bond. It is used to measure the current rate of return earned by the investor from the bonds.

Capital gain: Capital gain is the difference between the yield to maturity and current yield.

_________________________________

Calculate the current price of the bond as follows:

Current price=Coupon ×(1−(1+Rate)−Periods)Rate+Face value(1+Rate)Periods

Calculate the current yield as follows:

Current yield=CouponCurrent price

Calculate the capital gain yield as follows:

Capital gain yield=Yield to maturity−Current yield

D system has outstanding bonds that has face value of $1000 and coupon rate of 7%. Interest is paid semiannually on this bond. Yield to maturity is 10% and remaining time to maturity is 11 years

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