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You buy a bond today. It has a principal value of $1,000, an annual coupon of 9.5%, and a required yield of 7% (assuming annual compounding). It matures in 15 years. Exactly one year passes. The bond still yields 7% and you sell it for its current price. I hope that you know that the total return you received for the year, is equal to the yield. What I want is for you to tell me the two components of the total return or yield. In this problem, tell me the current yield at t = 15 years. Remember that the "current yield" in NOT simply today's yield. Answer in percent to three decimal places.

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Financial Management, Finance

Category:- Financial Management
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