Bond prices and yields Assume that the Financial Management Corporation's $1,000-par-value bond has a 5.200% coupon,...
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Bond prices and yields Assume that the Financial Management Corporation's $1,000-par-value bond has a 5.200% coupon, matures on May 15, 2027, has a current price quote of 95.737 and a yield to maturity (YTM) of 5.935%. Given this information, answer the following questions: a. What was the dollar price of the bond? b. What is the bond's current yield? c. Is the bond selling at par, at a discount, or at a premium? Why? d. Compare the bond's current yield calculated in part b to its YTM and explain why they differ. Bond prices and yields Assume that the Financial Management Corporation's $1,000-par-value bond has a 5.200% coupon, matures on May 15, 2027, has a current price quote of 95.737 and a yield to maturity (YTM) of 5.935%. Given this information, answer the following questions: a. What was the dollar price of the bond? b. What is the bond's current yield? c. Is the bond selling at par, at a discount, or at a premium? Why? d. Compare the bond's current yield calculated in part b to its YTM and explain why they differ.
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Answer rating: 100% (QA)
a The dollar price of the bond can be calculated by multiplying the current price quote by the par value Dollar price of the bond Current price quote Par value 95737 1000 95737 Therefore the dollar pr... View the full answer
Related Book For
Principles of Managerial Finance
ISBN: 978-0134476315
15th edition
Authors: Chad J. Zutter, Scott B. Smart
Posted Date:
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