26) If a $1,000 bond costs $1,000 and pays $50 interest, 1. the current yield is

Question

26) If a $1,000 bond costs $1,000 and pays $50 interest, 1. the current yield is 5 percent 2. the yield to maturity is 5 percent 3. the bond is selling for par a. 1 and 2 b. 1 and 3 c. 2 and 3 d. all of the above 27) What i s the coupon rate of a semiannual bond that matures after ten years, costs $1,146, and market rates of 7.5%? a. 8.2 percent b.9.0 percent c. 9.6 percent d. 10.1percent 28) If a 7 percent (annual), $1,000 bond matures after ten years and current interest rates are 9 percent, the current price of the bond would be a. $870 b. $872 c. $1,140 d. S1,142

Explanation / Answer

26 .d all of the above

27. N = 20, FV = 1000 PV = -1146 rate = 3.75%

use PMT function in excel and multiply by 2 and divide by 10

coupon rate = 9.60%

28. PMT = 70, fv = 1000, rate = 9% n = 10

use PV function

price = 872

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