Oil Well Supply offers 7.4 percent coupon bonds with semiannual payments and a yield to maturity...

Question

Question

Answer 1

Answer #1

1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =7x2

Bond Price =∑ [(7.4*1000/200)/(1 + 10.9/200)^k] + 1000/(1 + 10.9/200)^7x2

k=1

Bond Price = 831.65

2

current yield = coupon rate*par value/current price

Current yield%=(8.1/100)*1000/1215.19

Current yield% = 6.67 = 0.0667

Answer 2

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