(Ch. 9-Ch. 12) Fall 2017 Assignment Score: 0.00 0:54:08 Save Submit Test for Gra
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(Ch. 9-Ch. 12) Fall 2017 Assignment Score: 0.00 0:54:08 Save Submit Test for Grading Ch12 Financial Planning Exercise 14 t Question 48 of 48 eBook Chapter 12 Financial Planning Exercise 14 Calculating current yield and yield to maturity A(n) 20-year, zero coupon bond was recently quoted at 11.500. Find the current yield and yield to maturity of this issue, given the bond has a par value of $1,000. (Assume annual compounding for the vield answers to two decimal places. Do not round intermediate calculations. Leave no cell blank. Be sure to enter "o" wherever required. Current yield Yield to maturity 6 7 8 9 0 TYUExplanation / Answer
current price =par value*quoted price/100
= 1000*11.5/100
= $115
1)current yield is zero as there is no interest payment in case of zero coupn bond.
2)Yield to maturity = [Future value/present value]^1/n -1
= [1000/115]^1/20 - 1
= [8.69565]/.05 - 1
= 1.1142-1
= .1142 or 11.42%
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