You are considering the purchase of a $1,00 par value bond of Au Contraire, Inc. the bond is currentlly selling for $500 and (very un-typically) pays $20 quarterly. it matures in 20 years.
a. What is the coupon rate of this bond?
b. What is the current yield?
c. Why is the current yield higher than the stated coupon rate?
Someone please help and explain how you did this thanks!
2007-12-05 23:42:34 · 3 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
i made an error its 1,000
2007-12-06 02:27:59 · update #1
I think the par value is $1,000 (and not 1,00 as you say), then
a) The coupon rate is 20x4 = 80 or 8%
b) The current yield is 80/500 = 16%
c) The current yield is higher than the coupon rate because the bond is selling below its par value.
2007-12-06 00:07:29 · answer #1 · answered by Anonymous · 0⤊ 1⤋
fee of a inventory is often in step with fee to incomes ratio IE the earnings of each and every share is going into the procuring and advertising fee of the inventory by way of how plenty? a BLUE chip inventory could be around Trailing P/E 12-15 And growth inventory, this is moving nicely Tailing P/E 18/22 Speculative growth shares can't be quantified this type, and prefer Google can bypass interior the P/E a hundred,s So, analyze the stability sheets and earnings assertion of any inventory you % to purchase Calculate the ten significant ratio's and notice if the inventory seems...undervalued, common, or puffed up bypass with the undervalued inventory, except the fad is working on the others.
2016-09-30 23:53:47 · answer #2 · answered by Anonymous · 0⤊ 0⤋
you are lucky answe one is correct but you should post homework questions in the homework section!!!
2007-12-09 23:48:13 · answer #3 · answered by Anonymous · 0⤊ 0⤋