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Suppose a firm has the following bond information: Years to maturity: 8 Coupon Rate: 3%, semi-annual payments Par Value: $1,000 Price: 95% of par value **Calculate the current yield on the bond
Suppose a firm has the following bond information:
Years to maturity: 8
Coupon Rate: 3%, semi-annual payments
Par Value: $1,000
Price: 95% of par value
**Calculate the current yield on the bond. (Enter percentages
as decimals and round to 4 decimals).
Expert Solution
Computation of the current yield:-
Current yield = Annual coupon payments / Current price of the bond
= $1,000*3% / ($1,000 * 95%)
= $30 / $950
= 3.1579%
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