Rate of return and annualized nominal yield

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Reference no: EM131842195

Hammontree Corp. has an outstanding issue of $1,000 par value bonds with a 5.28% coupon rate, paid semiannually. The issue matures in 11 years. Bonds of similar risk are currently earning a 6.13% rate of return (annualized nominal yield). Consider why a bond might be earning a yield below the coupon rate. What might have happened? I will ask in class. However, BlackBoard really only handles quantitative questions well. So here I have a different question. There is a particular yield known as the “current yield” (to be clear, this is not another way of saying “today’s yield”). What is it for this bond? Answer in percent to three decimal places.

Reference no: EM131842195

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