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    Determine The Current Yield of A Bond Whose Face Value Is

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    Jenny Cajes
    The document contains 4 problems calculating current yield on bonds with different face values, interest rates, and purchase prices. It shows the calculations for determining current yield when given the face value, annual interest rate, and purchase price of each bond. The final problem calculates the purchase price needed for a $75,000 bond paying 11% interest semiannually to yield a target rate of 13% compounded semiannually over 6 years. The calculated purchase price is $71,685.51.

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    Determine The Current Yield of A Bond Whose Face Value Is

    Uploaded by

    Jenny Cajes
    77 views4 pages
    The document contains 4 problems calculating current yield on bonds with different face values, interest rates, and purchase prices. It shows the calculations for determining current yield when given the face value, annual interest rate, and purchase price of each bond. The final problem calculates the purchase price needed for a $75,000 bond paying 11% interest semiannually to yield a target rate of 13% compounded semiannually over 6 years. The calculated purchase price is $71,685.51.

    Original Title

    05 SEATWORK 2.

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    The document contains 4 problems calculating current yield on bonds with different face values, interest rates, and purchase prices. It shows the calculations for determining current yield when given the face value, annual interest rate, and purchase price of each bond. The final problem calculates the purchase price needed for a $75,000 bond paying 11% interest semiannually to yield a target rate of 13% compounded semiannually over 6 years. The calculated purchase price is $71,685.51.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    77 views4 pages

    Determine The Current Yield of A Bond Whose Face Value Is

    Uploaded by

    Jenny Cajes
    The document contains 4 problems calculating current yield on bonds with different face values, interest rates, and purchase prices. It shows the calculations for determining current yield when given the face value, annual interest rate, and purchase price of each bond. The final problem calculates the purchase price needed for a $75,000 bond paying 11% interest semiannually to yield a target rate of 13% compounded semiannually over 6 years. The calculated purchase price is $71,685.51.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    JENNY CAJES BSTM102

    1. Determine the current yield of a bond whose face value is


    ₱33,200 and pays a yearly of 13.7% if purchased at ₱36,700.

    When the price of bond is ₱33,200

    Current yield = 0 .
    = 13.7%

    When the price of bond is ₱36,700

    Current yield = 0 .

    2. What is the current yield to bond whose face value is ₱26,200


    and pays a yearly interest of 8% if purchased of ₱18,400?

    When the price of bond is ₱26,200

    Current yield = 0 .
    = 8%

    When the price of bond is ₱18,400

    Current yield = 0 .
    = 11.39%
    3. Determine the current yield to bond whose face value is
    ₱17,560 and pays a yearly interest of 8.7% if purchased at
    ₱16,970?

    When the price of bond is ₱26,200

    Current yield = 0 .
    = 8.7%

    When the price of bond is ₱16,970

    Current yield = 0 .
    = 9%

    4. A ₱75,000 at 11% bond pays coupon semiannually redeemable


    at ₱90,000 on January 13, 2017 is bought on January 13, 2011
    to earn 13% compounded semiannually. Find the purchase
    price.

     Given:
    V = ₱75,000
    r = 11% or 0.11
    j = 13% or 0.13
    m= 2
    n = tm 6(2) = 12
    i=
    b= = 0.11/2 = 0.045
    k = Fb = 75,000(0.055) =
    4,125

    SOLUTION:
    P=V
    p = 75,000 (1 + 0.065) −12 + 4,125
    p = 75,000 (1.065) −12 +4,125

    p = 75,000 (0.4696828549) + 4,125(8.8386190935)


    p = 35,226.2140792499 + 36,459.3037606875
    p = 71,685.51

    The price of the bond to yield 13% is ₱71,685.51

    V = 75,000 (0.11) = 8,250


    p = 35,226.2140792499 + 36,459.3037606875
    p = 71,685.51

    The price of bond is ₱27,529.62

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