A bond with a current yield of 7.48 percent is quoted at 104.409. What is the...

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Question

Answer 1

Answer #1

Solution: Current Yield = Annual Coupon Payment/Current Market Price of Bond

Thus, Annual Coupon Payment = Current Yield * Current Market Price of Bond

Current Yield = 7.48%

Current Market Price = 104.409

Hence, Annual Coupon Payment = 7.48% * 104.409 = 7.81

This means the investor would receive 7.81 per 100 par value of the bond

Hence, the Annual Coupon Rate = 7.81/100 = 7.81%

Answer 2

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