Calculate the current yield on this bond

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Mike has just paid $1,174 for a 5-year bond with a par value of $1,000 and a coupon rate of 9%.

a. What dollar amount of interest will he receive from this bond every six months? Explain or show work.

b. If market interest rates rise while Mike is holding the bond, will the market price of the bond rise or fall?

c. If the market price of this bond changes while Mike is holding it, will Mike's interest payments change? Explain.

d. Calculate the current yield on this bond, expressed as a percentage rounded to two decimal places.

 

Reference no: EM13259976

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