Bond prices and yields Assume that the Financial Management Corporation's $1,000-par-value bond has a 6.100 % coupon, matures on May 15, 2023, has a current price quote of 96.391 and a yield to maturity (YTM) of 7.315%. Given this information, answer the following questions:
a. What is the dollar price of the bond?
b. What is the bond's current yield?
c. Is the bond selling at par, at a discount, or at a premium? Why?
d. Compare the bond's current yield calculated in part b to its YTM and explain why they differ.
a. The dollar price of the bond is $___. (Round to the nearest cent.)
b. The bond's current yield is_____%. (Round to two decimal places.)
c. The bond is selling at ▼a discount / par/ a premium because its price is ▼ equal to/ greater than / less than the par value. (Select from the drop-down menus.)
d. Compare the bond's current yield calculated in part b to its YTM and explain why they differ. The yield to maturity is ▼higher/ lower than the current yield because the former includes $36.09 in price ▼ depreciation / appreciation between today and the May 15, 2023 bond maturity. (Select from the drop-down menus.)
A) Price of bonds in dollars = $ 963.91 B) Current yield... View the full answer