Question

A(n) 9.2% bond matures in 5 years and has a current yield (not YTM) of 5.5%. The bond's current trading price is $ Do not round any intermediate work. Round your final answer to 2 decimal places (example: 1234.567 1234.57). Do not enter the $ sign. Margin of error for correct responses/lt/.05. NOTE: You should refer to the definition of "current yield" from your class notes. The definition in your textbook should be ignored, as it might cause confusion.

Answer 1

Taking a face value of $ 1000, Coupon payment=9.2%*1000= $ 92

Current Yield=Coupon/Price * 100

so, 5.5= 92/ Price * 100

Price= 92*100* 1/5.5

=92*100*10/55

=92000/55

=1672.73

So the trading price is $ 1,672.73.