Asked by
Shupeng Hu (student)
on Dec 08, 2024
Verified
A coupon bond pays annual interest, has a par value of $1,000, matures in four years, has a coupon rate of 10%, and has a yield to maturity of 12%. The current yield on this bond is
A) 10.65%.
B) 10.45%.
C) 10.95%.
D) 10.52%.
E) None of the options are correct.
Coupon Bond
A type of bond that pays the holder a regular interest payment (the coupon) until maturity, at which point the principal amount is also repaid.
Yield To Maturity
The total return anticipated on a bond if it is held until the date it matures, including all payments from now until maturity.
Par Value
The face value of a bond or stock, as stated by the issuing company.
- Gain insight into the procedure for determining the current yield on coupon bonds.
- Acquire knowledge of the elements determining bond prices and yields.
Verified Answer
JO
Learning Objectives
- Gain insight into the procedure for determining the current yield on coupon bonds.
- Acquire knowledge of the elements determining bond prices and yields.