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A certain bond has a current yield of 8.10% and a market price of $925.50. What is

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A certain bond has a current yield of 8.10% and a market price of $925.50. What is the bond’s coupon rate?

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Solution Current yield on bond Annual coupon amount on bond Curre...View the full answer


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"I am a M.sc (organic chemistry) from NMU India and also a BSc graduate from The University of NMU, india. I have many years of tutoring experience and I enjoyed teaching all grades students. I have been tutoring with other tutoring sites also and has a very good circle of more than 500 students from USA UK India and some other from South Asia tool am doing one to one tutoring also and like to teach Reactions and mechanism all subjects specially network problem wisi etc and i also like tutoring physics.chemistry Maths and Chemistry subjects and i have also tutoring many students for SAT exam So love tutoring and can taught all grades student. Many of my students' parents message me that your lessons improved our children's grades . So loving tutoring. I love eating and that too of different cuisines. I made many self-papers for this exam which include the basics of chemistry and elementary of all chemistry topics. Initially I worked as a Research Associate at The University of NMU Maharashtra and While at The University I assisted professors with their research work, preparation of course material on corporate finance and equity analyst
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Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.

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