A bond with a face value of 100 is paying an annual coupon of 12 percent and trading in the markets for 109.50 per bond. What is the effective percentage yield of the bond?
CS Professional · Corporate Funding & Listings in Stock Exchanges · PYQS · June 2023
A bond with a face value of 100 is paying an annual coupon of 12 percent and trading in the markets for 109.50 per bond. What is the effective percentage yield of the bond?
Answer & Explanation:
Effective yield = (Coupon rate/ Market price) *100 = (12/109.50) × 100 = 10.96%
Topics: Debt Instruments
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