Whether it is a premium or discount bond, Current yield, yield to maturity, bid-ask spread in dollars. Introduction: Bonds trading above their face value are referred to as premium bonds. A discount bond has been issued for a lower price than its face value. The annual revenue (interest or dividends) from an investment is divided by the security's current market value to determine its current yield. In this measure, the price of a bond is considered rather than the bond's face value. The entire return anticipated on a bond if it is kept to maturity is known as yield to maturity (YTM). The difference between the list price and the sale price is known as the "bid-ask spread."

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Chapter 8, Problem 15QAP

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To calculate: Whether it is a premium or discount bond, Current yield, yield to maturity, bid-ask spread in dollars.

Introduction: Bonds trading above their face value are referred to as premium bonds. A discount bond has been issued for a lower price than its face value. The annual revenue (interest or dividends) from an investment is divided by the security's current market value to determine its current yield. In this measure, the price of a bond is considered rather than the bond's face value. The entire return anticipated on a bond if it is kept to maturity is known as yield to maturity (YTM). The difference between the list price and the sale price is known as the "bid-ask spread."

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