Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A 3.20 percent coupon municipal bond has 10 years left to maturity and has a price quote of 96.45. The bond can be called in four
years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and it has a par value of $5,000.)
Compute the bond's current yield.
Compute the yield to maturity.
Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket).
Compute the yield to call.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Current yield
Yield to maturity
%
%
Equivalent taxable yield
%
Yield to call
%
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Transcribed Image Text:A 3.20 percent coupon municipal bond has 10 years left to maturity and has a price quote of 96.45. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and it has a par value of $5,000.) Compute the bond's current yield. Compute the yield to maturity. Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). Compute the yield to call. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Current yield Yield to maturity % % Equivalent taxable yield % Yield to call %
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