Consider two $10,000 face-value corporate bonds. One is currently selling for $9,980 and matures in 15 years.
Question:
Consider two $10,000 face-value corporate bonds. One is currently selling for $9,980 and matures in 15 years. The other bond sells for $9,350 and matures in 3 years. Calculate the current yield for both bonds if both have a coupon rate equal to 5%. Which current yield is a better approximation of the yield to maturity?
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The current yield is a simple approximation of the yield on a bond and is calculated by dividing the ...View the full answer
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Related Book For 
Financial Markets And Institutions
ISBN: 9781292215006
9th Global Edition
Authors: Stanley Eakins Frederic Mishkin
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