Q5-3 BrainSoft has 12% coupon bonds on the market with 9 years to maturity. The bonds make semiannual payments and currently sell for 110% of par. What is the current yield on the bonds? The yield to maturity? The effective annual yield?

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.