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give accurate answer i have attach all the data with it for wrong answer i ll give thumbs down A 9% semiannual coupon bond matures
give accurate answer i have attach all the data with it for wrong answer i ll give thumbs down
A 9% semiannual coupon bond matures in 6 years. The bond has a face value of $1,000 and a current yield of 8.9672%. What are the bond's price and YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answer for the bond's price to the nearest cent and for YTM to two decimal places. Bond's price: $ YTM: % 'Brokerage houses occasionally report a bond's current yield, defined as the annual interest payment divided by the current price. For example, if Allied's 8% coupon bonds were selling for $981.60, the current yield would be $80/$981.60=8.15%. Unlike the YTM or YTC, the current yield does not represent the actual return that investors should expect because it does not account for the capital gain or loss that will be realized if the bond is held until it matures or is called. The current yield was popular before calculators and computers came along because it was easy to calculate. However, it can be misleading, and now it's easy enough to calculate the YTM and YTC. TABLE 7.1 Calculation of Current Yields, Capital Gains Yields, and Total Returns for 5%,8%, and 11% Coupon Bonds When the Market Rate Remains Constant at 8% Notes: * Using a financial calculator, the price of each bond is calculated by entering the data for N, IYR, PMT, and FV, then solving for PV= the bond's value. b The expected current yield is calculated as the annual interest divided by the price of the bond. 'The expected capital gains yield is calculated as the difference between the end-of-year bond price and the beginning-of-year bond price divided by the beginning-of-year bond price. The expected total return is the sum of the expected current yield and the expected capital gains yieldStep by Step Solution
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