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1) Assume that today's date is April 15, 2015
1) Assume that today's date is April 15, 2015. Fresh Bakery Inc. bond is an annual-coupon bond. Par value of the bond is $5,000.
Calculate annual coupon interest payments. The answer should be calculated to two decimal places
Company - Fresh Bakery
Price - 92.450
Coupon Rate - 9.431
Maturity Date - 04-15-2032
2) Assume that today's date is April 15, 2015. Fresh Bakery Inc. bond is an annual-coupon bond. Par value of the bond is $5,000.
Calculate the bond's current yield.
Round the answers to two decimal places in percentage form.
Company - Fresh Bakery
Price - 133.518
Coupon Rate - 7.921
Maturity Date - 04-15-2026
Expert Solution
1) Computation of the annual coupon interest payments:-
Annual coupon interest payments = Par value * Coupon rate
= $5,000*9.431%
= $471.55
2) Computation of the bond's current yield:-
Current yield = Annual coupon payment / Current price of bond
= ($5,000 * 7.921%) / ($5,000 * 133.518%)
= $396.05 / $6,675.90
= 5.93%
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