Bond Returns:
A 15-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. After one year, assuming the the yield to maturity (discount rate) remains the same as previous, calculate the following returns between the two years:
1) Current yield
2) Capital gains yield
3) Total returns
Hint:
year | 0 | 1 | |
rate | ?? | 10% | |
nper | 15 | 14 | |
pmt | 85 | 85 | |
pv | -925 | ?? | |
fv | 1000 | 1000 | |
type | 0 | 0 | |
excel | rate | pv | |
calculation | ?? | ?? | |
price | ?? | ?? | <-- from calculation |
coupon | ?? | <-- from bond specifications | |
current yield | ?? | <-- coupon / last price | |
capital gains yield | ?? | <-- % change in price | |
Total return | ?? | <-- current yield + capital yield |
Bond Returns: A 15-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. Aft...
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