Question
Assume that the Financial Management Corporation's $1,000-par-value bond has a 7.800% coupon, matures on May 15, 2027, has a current price quote of 108.682 and
Assume that the Financial Management Corporation's $1,000-par-value bond has a 7.800% coupon, matures on May 15, 2027, has a current price quote of 108.682 and a yield to maturity (YTM) of 7.024%. Given this information, answer the following questions:
a.What was the dollar price of the bond?
b.What is the bond's current yield?
c.Is the bond selling at par, at a discount, or at a premium? Why?
d.Compare the bond's current yield calculated in part b to its YTM and explain why they differ.
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
18th Edition
126409762X, 9781264097623
