Current price of the
Price of the bond is the
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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- Dynamic Systems has an outstanding bond that has a $1,000 par value and a 9 percent coupon rate. Interest is paid semiannually. The bond has 10 years remaining until it matures. Today the going interest rate is 12 percent, and it is expected to remain at this level for many years in the future. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. % Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forwardXZYY, Inc. currently has an issue of bonds outstanding that will mature in 24 years. The bonds have a face value of $1,000 and a stated annual coupon rate of 13% with annual coupon payments. The bond is currently selling for $1100. The bonds may be called in 6 years for 115% of par value. What is your expected quoted annual rate of return if you buy the bonds and hold them until maturity?arrow_forwardA bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. Assume a face value of $1,000 and annual coupon payments.a) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time?b) What will be the rate of return on the bond? c) If the inflation rate during the year is 3%, what is the real rate of return on the bond? Assume annual interest payments.arrow_forward
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- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
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