1. A 6-year Circular File bond pays interest of $80 annually and sells for $950. What is its coupon rate, current yield, and yield to maturity?
2. Bond Pricing - If Circular File wants to issue a new 6-year bond at face value, what coupon rate must the bond offer?© BrainMass Inc. brainmass.com June 3, 2020, 8:09 pm ad1c9bdddf
1. When the bond was issued, the Price = $1000 = FV
- then coupon rate = coupon / Face value = 80 / 1000 = 8%
- current yield = coupon / price ...
This solution provides a step by step response illustrating how to conduct the calculations required for each of these two questions inquiring about a circular file bond. All calculations and formulas are included in this 115 word response.