Homework Sourse2 3 Given bond market value 1050 bond par value 1000 coupon
2.
3.
Given: bond market value $1,050 bond par value $1,000 coupon rate nominal risk-free rate 1 % 11 %, paid semi-annually What is the bond\'s current yield? Solution
1:Current yield= Annual coupon/ Bond price
=11%*1000 / 1050
=110/1050
=10.48%
2:Return= Dividend + Sale Proceeds -Purchase
=200*0.15 + (200*28-35)- (200*20-35)
=$1630
3: Required return = Rf+ Beta*(Market return-Rf)
=2%+ 1.1*(8%-2%)
=8.6%
