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Callaghan Motor’s bonds have 7 years remaining to maturity. Interest is paid annually, the bonds have...

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Finance

Callaghan Motor’s bonds have 7 years remaining to maturity.Interest is paid annually, the bonds have a $1,000 par value, andthe coupon interest rate is 5.5 percent. The bonds have a yield tomaturity of 8 percent.

1. What is the current market price of these bonds?

2. What is the current yield?

3. What is the capital gain/loss yield?

Answer & Explanation Solved by verified expert
3.6 Ratings (475 Votes)
1The current market price of these bonds The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the bond 1000 Annual Coupon Amount 55 1000 x 550 Annual Yield to Maturity 8    See Answer
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Callaghan Motor’s bonds have 7 years remaining to maturity.Interest is paid annually, the bonds have a $1,000 par value, andthe coupon interest rate is 5.5 percent. The bonds have a yield tomaturity of 8 percent.1. What is the current market price of these bonds?2. What is the current yield?3. What is the capital gain/loss yield?

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