Asked by
Temara Fraser
on Nov 04, 2024
Verified
If an 8% coupon bond is trading for $1,025.00, it has a current yield of
A) 7.8%.
B) 8.7%.
C) 7.6%.
D) 7.9%.
E) 8.1%.
Coupon Bond
A bond that pays the holder periodic interest payments based on a pre-defined rate (the coupon rate) until maturity when the principle is also repaid.
Current Yield
The annual income (interest or dividends) from an investment, expressed as a percentage of the current price of the investment.
Trading
The act of buying, selling, or exchanging financial assets like stocks, bonds, or commodities in financial markets.
- Develop an understanding of how to ascertain the current yield of coupon bonds.
- Apprehend the notion of yield to maturity (YTM) and its significance.
Verified Answer
TS
Learning Objectives
- Develop an understanding of how to ascertain the current yield of coupon bonds.
- Apprehend the notion of yield to maturity (YTM) and its significance.