A 5000 bond is trading for 4950 the bonds current yield cy

Question

1. A $5,000 bond is trading for $4,950. The bond's current yield CY is 0.035. What is the bond's coupon rate?

2. Assume a bond with $15,000 face value and a coupon rate of 3.2 % has 4 years to its maturity. An investor pays $99 per $100 face value and purchases the bond.

(a) What is the bond's approximate YTM?

(b) What is the bond's exact YTM (assume annual compounding and coupon payment)?

(c) What is the bond's current yield CY?

(d) What is the investor's rate of return?

Answer 1

For the bond's coupon rate, provide solution to question illustrated below in a word document. Please keep in mind to show the whole computation part. Question 1: A $5,000 bond is trading for $4,950. The current yield of the bond CY is 0.035. Determine the bond's coupon rate? Question 2: Suppose a bond having $15,000 face value and a coupon rate of 3.2 % consists of 4 years to its maturity. The investor pays $99 per $100 face value and buys the bond. a) Determine the bonds approximate YTM? b) Determine the bond's exact YTM (suppose yearly compounding and coupon payment)? c) Determine the current yield of bond CY? d) Determine the rate of return of the investor?