Answered

Discover the answers to your questions at Westonci.ca, where experts share their knowledge and insights with you. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

Stuart Software has 5.7 percent coupon bonds on the market with 11 years to maturity. The bonds make semiannual payments and currently sell for 93 percent of par. What is the current yield on the bonds

Sagot :

Answer:

current yield = 6.13%

Explanation:

Given:

The software has 5.7 percent coupon bonds

maturity=11 years

current sell=93 percent of par

The objective is to find the current yield on the bonds

Formula used:

Current yield = [tex]\frac{Annual Coupon payment}{current selling price}*100[/tex]

Solution:

Current selling price=93% of 1000=930

Annual coupon payment= 5.7% of 1000=57

Then,

On substituting the values in the formula,

Current yield = [tex]\frac{57}{930}[/tex]*100

On Simplifying,

Current yield =6.13%

Therefore,

Current yield =6.13%

Thank you for trusting us with your questions. We're here to help you find accurate answers quickly and efficiently. We hope this was helpful. Please come back whenever you need more information or answers to your queries. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.