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