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    Current Yield, Yield to Maturity & Effective Annual Yield

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    The 7 percent coupon bonds of Firm X are selling for 102 percent of par value. The bonds mature in 6 years and pay interest semiannually.

    What is the current yield, yield to maturity and effective annual yield?

    1. 6.86; 6.59; 6.70

    2. 6.86; 6.23; 6.53

    3. 6.37; 6.23; 6.53

    4. 6.37; 6.59; 6.86

    5. 6.59; 6.65; 6.70

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    Solution Preview

    Current Yield, Yield to Maturity & Effective Annual Yield
    The 7 percent coupon bonds of Firm X are selling for 102 percent of par value. The bonds mature in 6 years and pay interest semiannually.

    What are the current yield, yield to maturity and effective annual yield?

    1. 6.86; 6.59; 6.70

    2. 6.86; 6.23; 6.53

    3. 6.37; 6.23; 6.53

    4. 6.37; 6.59; 6.86

    5. 6.59; 6.65; 6.70
    Answer: 1
    Current yield = Annual Coupon Payment/Current Price
    = 70/1,020
    = ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate what is the current yield, yield to maturity and effective annual yield.

    $2.19