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    Calculating current yield, YTM and effective annual yield

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    Martin Software has 9.4 percent coupon bonds on the market with 19 years to maturity. The bonds make semi-annual payments and currently sell for 107.5 percent of par.

    a. What is the current yield on the bonds?

    b. What is the YTM?

    c. What is the effective annual yield?

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    Solution Preview

    Please refer attached file for better clarity of working.

    a. What is the current yield on the bonds? 
    Let the face value of the bond is $1000
    Current price of the ...

    Solution Summary

    The solution depicts the steps to estimate the current yield, yield to maturity and effective annual yield in the given case.

    $2.19