Solutions to Chapter 1

8. The bond pays a coupon of 7.125% which means annual interest is $71.25. The bond is selling for: 130 5/32 = $1,301.5625. Therefore, the current yield is: $71.25/$1301.5625 = 5.47%. The current yield exceeds the yield-to-maturity on the bond because the bond is selling at a premium. ................
................

In order to avoid copyright disputes, this page is only a partial summary.