Assume that a company issued a bond with $1000 face value, 10% coupon rate, 20 years maturity. If the bond is sold after 5 years, how much this bond will be sold if the yield to maturity (YTM) is 8%? What is the current yield?

Assume that a company issued a bond with $1000 face value, 10% coupon rate, 20 years maturity. If the bond is sold after 5 years, how much this bond will be sold if the yield to maturity (YTM) is 8%? What is the current yield?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8P

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Step 1: Present value of the bond

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Step 2: Using excel PV function

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Step 3: Value of the bond if it is sold in 5 years time

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Step 4: Calculation of current yield

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