The HUANG Company currently has one bond issue outstanding. This bond pays a coupon rate of...
The HUANG Company currently has one bond issue outstanding. This bond pays a coupon rate of 8% ($80 per year) and matures in six years, and has a par value of $1,000. If you require a 14% rate of return,
What is the current yield (not yield )of this bond in the first year?
a. 10.080%
b.11.012%
c.11.061%
d.10.435%
e.11.096%
Homework Answers
Calculation of current price:-
=PV(rate,nper,pmt,fv)
=PV(14%,6,-80,-1000)
=766.68
Calculation of current yield:-
=Coupon payment/current price
=80/766.68
=10.435%
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