FIN350 W5Assignment.docx FIN350 Week 5 Assignment Grantham University The bond yield

Document Content and Description Below

FIN350 W5Assignment.docx FIN350 Week 5 Assignment Grantham University The bond yield rate refers to the return on a bond. The bond yield is equal to its coupon rate. The coupon rate = annual coup... on payment/bond face value. A current yield is the bonds face value plus any interest rate. This would be more accurate than the coupon yield if the price is different than its face value. There are more complex methods of calculating a bond yield to account for different situations. As bond prices increase, yield prices fall. If I was to buy a bond that matures in five years at an annual coupon rate of 10% and $1000 face value, each year the bond would pay $100. If the interest rate rises above 10%, to 12% the original bond will still only pay $100. Current yield is equal to the annual coupon rate/bond price. To get a more accurate yield, you would use more complex calculations like the Yield to Maturity(YTM), Bond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Show More]

Last updated: 1 year ago

Preview 1 out of 3 pages