Answer : Current yield on bond = Annual interest payment/ Current market price
Annual interest payment = $800*0.10= $80
Market price = $740
Current yield on bond= $80/$740= 0.1081*100= 10.81%
Expected rate of capital gain =( ( New price - Old price) / Old price)*100= ((750-740)/740)*100= 1.35%
Expected rate of return on bonds = Current yield + Rate of capital gain = 10.81% + 1.35%= 12.16%
A bond has a face value of $800 and a 10% coupon rate, its current price...
please show steps 11. Abond has a face value of $800 and a 5% coupon rate, its current price is $740, and it is expected to increase to $770 next year. The current yield is _%. (Enter your response rounded to one decimal place.) The expected rate of capital gain is %. (Enter your response rounded to one decimal place.) The expected rate of return is %. (Enter your response rounded to one decimal place.)
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