A $1,000 face value bond is selling for $1,016.36. The bond pays interest semian

Question

A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is _____ percent and the coupon rate is _____ percent. (Points : 1)

       5.86; 5.90

       5.90; 6.00

       5.90; 5.86

       6.00; 5.90

6.00; 5.86

A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is _____ percent and the coupon rate is _____ percent. (Points : 1)

Explanation / Answer

A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is _____ percent and the coupon rate is _____ percent

YTm =5.48%

semi annual YTM (rate) = 2.74%

No of semi annuall period left to maturity (nper) = 3.5*2 = 7

PV = 1016.36

FV = 1000

Semi Annual Coupon Amount = pmt(rate,nper,pv,fb)

Semi Annual Coupon Amount = pmt(2.74%,7,-1016.36,1000)

Semi Annual Coupon Amount = $ 30

Coupon Rate = 30/1000 *2 = 6%

Current Yield = 30/1016.36 *2 = 5.90%

Answer

Current Yield = 5.90%

Coupon Rate = 6%

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