125. Current yield--annual bond Answer: a Diff: E N
Current yield = Annual interest/Current bond price
Current yield = $80/$925
Current yield = 8.65%.
126. Yield to maturity--annual bond Answer: c Diff: M N
Enter the following data as inputs in your calculator as follows:
N = 10; PV = -925; PMT = 80; FV = 1000; I = ? Solve for I = kd = YTM = 9.18%.
127Future bond value--annual payment Answer: e Diff: M N
Enter the following data as inputs in your calculator as follows:
N = 7; I = 9.18; PMT = 80; FV = 1000; PV = ? Solve for PV = -$940.97. VB = ≈ $941.00.
128. Bond value--annual payment Answer: d Diff: E N
Enter the following data as inputs in your calculator:
N = 12; I = 7; PMT = 0.08 1,000 = 80; FV = 1000; and then solve for PV = -$1,079.43. VB = $1,079.43.
129. Future bond value--annual payment Answer: e Diff: E N
3 years have passed so N now is 12 – 3 = 9.
N = 9; I = 7; PMT = 0.08 1,000 = 80; FV = 1000; and then solve for PV = -$1,065.15. VB = $1,065.15.
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