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Ezzell Enterprises' noncallable bonds currently sell for $1,154.25. They have a 5-year maturity, semi-annual coupon rate of 12.00%, and a par value of $1000. What is the bond's capital gain or loss yield?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72.A. 8.18%B. –2.08%C. –2.22%D. 6.13%E. 10.40%

Question
Ezzell Enterprises' noncallable bonds currently sell for $1,154.25. They have a 5-year maturity, semi-annual coupon rate of 12.00%, and a par value of $1000. What is the bond's capital gain or loss yield?

Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72.
A. 8.18%
B. –2.08%
C. –2.22%
D. 6.13%
E. 10.40%
check_circleAnswer
Step 1
Capital gain
bydeduching cuvreent yield prom yield to
matwity CYTM).
YTM and cerent yield uil
the follouwing ermulas
ar los yield
on bond uill be calculated
be calulated by
wing
pie
cwrrent
Par value
YTM Coupon amount
wvent brice
Par value
2
Coupon amount
Current dilling prie
yield
Cucrens
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Capital gain bydeduching cuvreent yield prom yield to matwity CYTM). YTM and cerent yield uil the follouwing ermulas ar los yield on bond uill be calculated be calulated by wing pie cwrrent Par value YTM Coupon amount wvent brice Par value 2 Coupon amount Current dilling prie yield Cucrens

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Step 2
Calculation of YTM and avoant yield
Par valu x caupon rat
Coupon amount
1000 X 12/
$120 (annual Yata)
Semi-annual coupon rate
$100/2
$60
cwnent bond pne
YTM- Coupon anmaunt
far value
Pax value + bond price
2
$ 1154.2.5
$60 lo0
5X2
l000 +$1154.25
2
$60-15.43 x 100= 4.0%
semi-annuat YTM
annuat YTM
4.09 °/.
4.09 X2
8-18%
Current Yield
Caupon amount (annual) lo0
Current selli ng pie
$120
1154.25 Xlo0
10.40
Thuuore annual YTM i P.18/. andl Cwoctnt
yield i 10.Y0
help_outline

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Calculation of YTM and avoant yield Par valu x caupon rat Coupon amount 1000 X 12/ $120 (annual Yata) Semi-annual coupon rate $100/2 $60 cwnent bond pne YTM- Coupon anmaunt far value Pax value + bond price 2 $ 1154.2.5 $60 lo0 5X2 l000 +$1154.25 2 $60-15.43 x 100= 4.0% semi-annuat YTM annuat YTM 4.09 °/. 4.09 X2 8-18% Current Yield Caupon amount (annual) lo0 Current selli ng pie $120 1154.25 Xlo0 10.40 Thuuore annual YTM i P.18/. andl Cwoctnt yield i 10.Y0

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