Question

Bourdon Software has 11.8 percent coupon bonds on the market with 15 years to maturity. The bonds make semiannual payments and currently sell for 108.7 percent of par.What is the current yield on the bonds?What is the YTM?What is the effective annual yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

The current yield on the bonds is 10.86%

The effective annual yield is 10.63%

Explanation:

The formula for current yield is given as

(coupon interest * face value)/market price

coupon interest rate 11.8%

face value is $1000.00

market price =$1000*108.7%

Find the computation of the current yield as well as effective annual yield in the attached spreadsheet.

Download xlsx