Consider a 23-year bond with 7 percent annual coupon payments. The market rate (YTM) is 6.4...
Consider a 23-year bond with 7 percent annual coupon payments. The market rate (YTM) is 6.4 percent for this bond. The current yield of the bond is _______ percent. Answer it in percentage without the % sign, and round it to two decimal place, e.g., 5.69.
Homework Answers
Say, 1/1/2019 is the settlement date for the bond. So, maturity of the bond is 23 years after i.e. 12/31/2041.
Price of the bond is $107.12 (using $100 as the par value). Calculation is given below:
So, current yield= 7/107.12=6.53%
Current yield of the bond is 6.53%.
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