Find the current yield of the following bond using the information in the table. (Round your answer to two decimal places.)

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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Question

The current yield for an investment can be defined in many ways. Here is a formula for the current yield of a bond.

Current yield = 
coupon rate
market price
 × 100

Find the current yield of the following bond using the information in the table. (Round your answer to two decimal places.)

The Dow Chemical bond

 %

Order Ratings Qty Min
Buy
Buy
Buy
Buy
Buy
Baa3/BB
A3/A-
Baa3/BBB
A1/AA
Aa3/A+
100
100
100
100
100
Buy Baa1/BBB+ 100
Ticker
GM
DOW
TYC
ABT
ΚΟ
K
Description
General Mtrs Corp
370442BB0 Global Nt
Make-Whole
Dow Chem Co
260543BL6 Nt
Non-Callable
Tyco Intl Group S A
902118AY4 Nt
Make-Whole
Abbott Labs
002824AP5 Nt
Make-Whole
Coca Cola Co
191216AH3 Nt
Make-Whole
Kellogg Co
487836AS7 Nt
Make-Whole
Coupon Maturity YTC/YTM Price
7.200
01-15-2011
9.254
6.125 02-01-2011
6.750
02-15-2011
4.257
5.750 03-15-2011
4.405
3.750 03-15-2011 4.145
4.120
6.600 04-01-2011 4.359
91.242
109.195
111.564
98.005
108.209
111.285
Transcribed Image Text:Order Ratings Qty Min Buy Buy Buy Buy Buy Baa3/BB A3/A- Baa3/BBB A1/AA Aa3/A+ 100 100 100 100 100 Buy Baa1/BBB+ 100 Ticker GM DOW TYC ABT ΚΟ K Description General Mtrs Corp 370442BB0 Global Nt Make-Whole Dow Chem Co 260543BL6 Nt Non-Callable Tyco Intl Group S A 902118AY4 Nt Make-Whole Abbott Labs 002824AP5 Nt Make-Whole Coca Cola Co 191216AH3 Nt Make-Whole Kellogg Co 487836AS7 Nt Make-Whole Coupon Maturity YTC/YTM Price 7.200 01-15-2011 9.254 6.125 02-01-2011 6.750 02-15-2011 4.257 5.750 03-15-2011 4.405 3.750 03-15-2011 4.145 4.120 6.600 04-01-2011 4.359 91.242 109.195 111.564 98.005 108.209 111.285
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