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Workman Software has 11.2 percent coupon bonds on the market with 20 years to maturity. The bonds make semiannual payments and currently sell for 108.4 percent of par. a. What is the current yield on the bonds

Respuesta :

Answer:

10.33%

Explanation:

The computation of the current yield on the bonds is shown below:-

current yield on the bonds = Coupon bond ÷ Current price of bond

= (Par value × Coupon rate) ÷ (Par value × Current selling price percentage)

= ($1,000 × 11.2%) ÷ ($1,000 ÷ 108.4%)

= $112 ÷ $1,084

= 10.33%

Therefore we have applied the above formula.

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