A 3-year 6.5 percent semiannual-pay bond has a current yield of 6.61 percent. What is the...

Question

Question

A 3-year 6.5 percent semiannual-pay bond has a current yield of 6.61 percent. What is the current market price as a percent of par?

Group of answer choices

A. 101.692

B. 98.336

C. 99.705

Answer 1

Answer #1

Current yield = annual coupon payment / current market price

Annual coupon payment per $100 of par value = $100 * coupon rate = $100 * 6.5% = $6.50

Current yield = annual coupon payment / current market price

6.61% = $6.50 / current market price

current market price = $6.50 / 6.61%

current market price = $98.336

Answer 2

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