Bond price and yield calculations
Problem:
A corporation has a $1,000 par value bond outstanding that was issued for 30 years 5 years ago at a coupon rate of 15%. The yield on similar bonds is now 12%. What is the price and what is it yielding if it is selling for $938.81?
Now Priced at $20 (50% Discount)
Recommended (96%)
Rated (4.8/5)
Please explain in detail, not understanding the difference between the coupon rate and the market rate.
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What is the price and what is it yielding if it is selling for $938.81?
a. What is the current yield on the bond? b. What is the yield to maturity?
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