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lubasha [3.4K]
3 years ago
14

A company’s bonds currently sell for $1,200. The bonds have a 6-year maturity, a 6% coupon paid semi-annually, and a par value o

f $1,000. What is the bond’s current yield?
Business
1 answer:
Artyom0805 [142]3 years ago
6 0

Answer:

2.5%

Explanation:

Please follow the below mentioned steps in order to calculate a bond's current yield.

Step 1: Calculate annual bond payment (par value × coupon rate).

Step 2: Divide result from step 1 with 2 in order to convert it into semi-annual terms.

Step 3: Then divide the result from step 2 upon current market price and convert into a percentage.

Solution from step 1 to 3:

- Annual bond payment = $1000 × 6%

<em>ABP = $60</em>

- Semi-annual bond payment = $60 ÷ 2

<em>SABP = $30</em>

- Bond's current yield = $30 ÷ $1200 × 100

<em>BCY = 2.5%</em>

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Salsk061 [2.6K]

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6 0
3 years ago
Read 2 more answers
Select all that apply.
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Answer:

adding up consumption, investment, government expenses, and net exports

adding up the market prices of final goods and services produced in the U.S

adding up the incomes of producers and taxes paid to the government

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GDP is calculated using three methods. They include the income, production, and expenditure approach.

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The production approach involves getting the value of all the finished consumer goods and services in the economy. The approach excludes intermediary goods and work-n progress. GDP is obtained by adding the total of the finished products and services and multiplying them by their prices. (3rd option)

The consumption option applies a formula that GDP = C+G+I+ NX, where C is private consumption expenditure,  G is government consumption and investment expenditure, and I in private investment expenditure. NX is the net imports. ( 1 st option )

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