What’s the difference between current yield and yield to maturity? Between promised yield and realized yield? How does YTC differ from YTM?
Answer to relevant QuestionsBriefly describe the term bond-equivalent yield. Is there any difference between promised yield and bond-equivalent yield? Explain. An investor is considering the purchase of a $1,000 par value bond with an 8% coupon rate (with interest paid semiannually) that matures in 5 years. If the bond is priced to yield 6%, what is the bond’s current price? A 10%, 25-year bond has a par value of $1,000 and a call price of $1,075. (The bond’s first call date is in 5 years.) Coupon payments are made semiannually. a. Find the current yield, YTM, and YTC on this issue, given that ...A bond has a Macaulay duration of 8.62 and is priced to yield 8%. If interest rates go up so that the yield goes to 8.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down ...A 20-year bond has a coupon of 10% and is priced to yield 8%. Calculate the price per $1,000 par value using semiannual compounding. If an investor purchases this bond 2 months before a scheduled coupon payment, how much ...
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