FFN20303: A bond matures in 12 years and pay 8 percent coupon annually. The bond has face value of RM1000: Money And Capital Market Assignment, MSU, Malaysia

1. A bond matures in 12 years and pay 8 percent coupon annually. The bond has face value of RM1000 and currently sells for RM985. What is the bond’s current yield and yield to maturity?

1. 1. Current yield.

Coupon Payment = CR% x Par value

Current Yield (%)        =     Coupon Payment

                                                Value or Price of Bond

Yield to maturity. (answer:8.19%)

YTM = CP + (PV – Vb)/n

                                     (PV + Vb)/2

2.Kufman Enterprise has bonds outstanding with a RM1,000 face value and 10 years left until maturity. The bonds have an 11 percent annual coupon payment. The current price of these bonds is RM1,175. Calculate:

1. Current Yield (CY).

1. Yield To Maturity (YTM).

3. A bond that matures in 10 years sells for RM985. The bond has a face value of RM1,000 and a 7 percent annual coupon. Calculate;

Current Yield (CY).

Yield To Maturity (YTM).

4. A 10-year, 12 percent semi-annually coupon bond, with a par value of RM1,000 sells for RM1,100. Calculate;

1. Current Yield (CY).
2. Yield To Maturity (YTM).

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