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Bourdon Software has 6.4 percent coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for 106.8 percent of par.
What is the current yield on the bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Respuesta :

saqib097

Answer:

The current yield on the bonds is 5.99%

Explanation:

Current yield = Annual coupon payment / Price Current yield

= $64 / $1,068

Current yield = 0.0599, or 5.99%

The bonds in which the annual interest or the face value is repaid at the time of maturity is called coupon bond.

The coupon rate is estimated by counting the total value of the annual revenue and then dividing it by the par value of the bond.

The current yield on bonds is  5.99%.

Yield can be calculated as:

Given,

  • Annual coupon payment = $64

  • Value of  Current yield =  $1,068

The formula for calculating current yield is:

[tex]\rm Current\; yield = \dfrac{Annual \;coupon\; payment}{Price-Current \;yield}[/tex]

Substituting values in the formula we get:

[tex]\rm Current \;yield = \dfrac {\$64}{\$1,068}[/tex]

= 0.0599, or 5.99%

Thus, the current yield is 5.99%.

To learn more about coupon bonds follow the link:

https://brainly.com/question/4357986

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