shestheone2447 shestheone2447

25-12-2020
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Keyser Materials has 8 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 102 percent of par. What is the current yield

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topeadeniran2 topeadeniran2

26-12-2020

Answer: 1020

Explanation:

The following information can be gotten from the question:

Face value of bond = 1000

Coupon = 8%

Therefore, PMT = 8% × 1000/2 = 40

Years to maturity = 19

Since semiannual payments are made,

Nper = 19 × 2 = 38

Current price = PV

= 102% × 1000

= 1.02 × 1000

= 1020

1. Current Yield = Coupon/Current prce

= (2*40)/1020 = 7.84%

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