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A $1000 par value bonds pays an 8% APR coupon semiannually. If the bond has 10...

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Finance

A $1000 par value bonds pays an 8% APR coupon semiannually. Ifthe bond has 10 years to maturity and a YTM of 10%, what is itsafter-tax current yield for an investor paying 25% taxes?

Answer: D. 6.9%

Please explain how to find this by hand without using Excel.

Answer & Explanation Solved by verified expert
4.0 Ratings (776 Votes)
Step1 The Price of the Bond The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the Face ValuePar Value The Price of the Bond is normally calculated either by using EXCEL Functions or    See Answer
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A $1000 par value bonds pays an 8% APR coupon semiannually. Ifthe bond has 10 years to maturity and a YTM of 10%, what is itsafter-tax current yield for an investor paying 25% taxes?Answer: D. 6.9%Please explain how to find this by hand without using Excel.

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