A) A semiannual coupon bond that matures in 7 years sells for$1,020. It has a fa
ID: 2770467 • Letter: A
Question
A) A semiannual coupon bond that matures in 7 years sells for$1,020. It has a face value of $1,000 and a yield to maturity of10.5883 percent. What is its current yield?B) You are considering a 10-year. $1,000 par value bond. Itscoupon rate is 9 percent, and interest is paid semiannually. If yourequire an "effective" annual interest rate(not a nominal rate) of8.16 percent, then how much should you be willing to pay for thebond? A semiannual coupon bond that matures in 7 years sells for$1,020. It has a face value of $1,000 and a yield to maturity of10.5883 percent. What is its current yield?
B) You are considering a 10-year. $1,000 par value bond. Itscoupon rate is 9 percent, and interest is paid semiannually. If yourequire an "effective" annual interest rate(not a nominal rate) of8.16 percent, then how much should you be willing to pay for thebond?
Explanation / Answer
A) A semiannual coupon bond that matures in 7 years sells for$1,020. It has a fa