Current price of the
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
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Calculate the current price of the bond as follows:
Calculate the current yield as follows:
Calculate the capital gain yield as follows:
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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- Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?arrow_forwardCurrent Yield for Annual Payments Heath Food Corporations bonds have 7 years remaining to maturity. The bonds have a face value of 1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield?arrow_forward
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