Yield to maturity and current yield

    • Current Yield | Definition, Formula & Example

      May 30, 2007 · a. What is the yield to maturity? b. For the coming year, what is the expected current yield and the expected capital gains yield? c. Will the actual realized yields be equal to the expected yields if interest rates change? If not, how will they differ? a. The current yield is defined as the annual coupon payment divided by the current price.

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    • [DOC File]Current yield, capital gains yield, and yield to maturity

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      Current Yield to maturity (discount factor) Need to weight present value of cash flows from bond by time received. In order for a bond to be protected from the changes in interest rates after purchase, the price risk and coupon reinvestment must offset each other.

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    • [DOC File]Bond Yields and Prices

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      yield to maturity=from calculator=1 1.75% capital gain yield= yield to maturity-current yield=0.64% 15. If an investor purchases a bond when its current yield is higher than the coupon rate, then the bond's price will be expected to:

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    • [DOC File]Sample midterm

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      The current yield is defined as the yearly coupon payment divided by the price of the security. The formula for the current yield is identical to the formula describing the yield to maturity for a consol. The current yield is always a poor approximation for the yield to maturity. All of the above are true. Only (a) and (b) of the above are true.

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    • [DOC File]Soln Ch 13 Bond prices

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      Understand what the yield to maturity (YTM) of a bond represents. Understand the relationship between YTM and the coupon rate and the market value of a bond. For example, when the market rate, or YTM, is greater than the coupon rate a bond sells at a discount—that is, its price is less than its par value.

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    • [DOCX File]Measuring Yield

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      If the yield to maturity is greater than the current yield, then the bond offers the prospect of price appreciation as it approaches its maturity date. Therefore, the bond must be selling below par value. 16. The coupon rate is less than 9%. If coupon divided by price equals 9%, and price is less than par, then price divided by par is less than 9%.

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    • [DOC File]Principles of Finance

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      6. What is the current yield of a bond with a 6% coupon, four years until maturity, and a price of $750? A) 6.0% . B) 8.0% . C) 12.0% . D) 14.7% . Answer: B . $60/750 = 8%. 7. The discount rate that makes the present value of a bond’s payments equal to its price is termed the: A) rate of return. B) yield to maturity. C) current yield. D ...

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