What is the current yield (not yield to maturity) of a bond with the following characteristics:...
What is the current yield (not yield to maturity) of a bond with the following characteristics: 100 face, purchase price $95.60, 20-year maturity, 4% coupon paid semi-annually?
Homework Answers
Current yield = Annual coupon payments/ price of bond
The annual coupon payments are = 4% * 100
= $4
The price paid for the purchase of bond is = $95.6
So, the current yield is :
= $4/ $95.6
= 4.18%
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What is the current yield (not yield to
maturity) of a bond with the following characteristics:...
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