Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a bond that pays interest semiannually has a price

A bond that pays interest semiannually has a price of $1,043.47 and a semiannual coupon payment...

Free

80.2K

Verified Solution

Question

Finance

A bond that pays interest semiannually has a price of $1,043.47and a semiannual coupon payment of $27.00. If the par value is$1,000, what is the current yield? Pick one: A.4.92% B. 2.59% C.5.18% D. 2.70% E. 5.40%

Answer & Explanation Solved by verified expert
3.8 Ratings (427 Votes)

Information provided:

Par value= future value= $1,000

Current price= present value= $1,043.47

Semi-annual coupon payment= $27

Current yield is calculated using the below formula:

Current Yield= Annual interest/Current price

                          = $27*2/ $1,043.47

                          = $54/ $1,043.47

                          = 0.0518*100

                          = 5.18%

Hence, the answer is option c.

In case of any query, kindly comment on the solution.

                                                                                                                                               
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A bond that pays interest semiannually has a price of $1,043.47and a semiannual coupon payment of $27.00. If the par value is$1,000, what is the current yield? Pick one: A.4.92% B. 2.59% C.5.18% D. 2.70% E. 5.40%

Other questions asked by students

Q

company has free cash flow of $120m last tear. investors belueve cahs flow will grow by...

Finance
Q

(3) Use the Hungarian Method to find the minimum possible cost for assigning the following jobs...

Advance Math
Q

find a recurrence relation for the number of bit strings of length n that contain the string...

Advance Math
Q

Describe the 13C NMR spectrum of 2-methylcyclohexanol.

Chemistry
Q

The following data lists the ages of a random selection of actresses when they won an...

Statistics
Q

8 Factor completely 5a4b 20a b5

Geometry
Q

Any help is much appreciated. Please explain each step. ...

Accounting
Q

Questions: 1. What is the net Form W-2 wages? 2. What is miscellaneous...

Accounting
Q

1. An excessive focus on diagnostic control systems and critical performance variables can cause an...

Accounting
Q

i need the answers please pocel (a) Compute the...

Accounting
Q

August 31, 2022 Before Adjustment Dr. Cr. $10,410 8,540 Cash After Adjustment Dr. Cr. $10,410...

Accounting
Q

tatements. Consider the case of Cold Goose Metal Works Inc.: Cold Goose Metal Works Inc....

Finance