Assume you purchased a corporate bond at its current market price of $850 on January 1, 2017.
Question:
Assume you purchased a corporate bond at its current market price of $850 on January 1, 2017. It pays 9 percent interest and will mature on December 31, 2026, at which time the corporation will pay you the face value of $1,000.
a. Determine the current yield on your bond investment at the time of purchase.
b. Determine the yield to maturity on your bond investment at time of purchase.
Step by Step Answer:
a Current yield Interest income Current market value Curren...View the full answer
Personal Finance
ISBN: 9781259650659
7th Canadian Edition
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Arshad Ahmad, Jordan Fortino
Related Video
The yield to maturity (YTM) is the percentage rate of return for a bond assuming that the investor holds the asset until its maturity date. This video will give a complete tutorial on how to calculate Yield to Maturity on Microsoft Excel
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