what is the current yield of an 8% semiannual coupon bond quoted at 106.472?

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Answer 1

Answer #1

Solution :-

Assume the Face Value of Bond = $100

The Coupon rate of bond = 8%

As Semiannual Coupon Bond

So Semiannual Coupon = $100 * 8% * 6 / 12 = $4

Price of the Semiannual Coupon Bond = $106.472

Therefore Semiannual Current Yield = $4 / $106.472 = 3.757%

Annually Current Yield = 3.757% * 2 = 7.514%

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Answer 2

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