1. what is the relationship between the coupon rate and the current yield, if an investor pays $1025 for a bond with a face value of $1000 and annual payments? 2. The annual dollar interest payment of a security is equal to $60, and the security currently sells for $400. What is the current yield of this security equal to? Any help from the Clutch Fans?
I believe coupon rate is based on the par (face) value, and current yield is based on the actual purchase price ($1050 in your example). I'm unsure about the second question, but I assume the current yield is again the current interest paid based on the purchase price (15%). I hope that helps.
I am sooo glad I only had to take one finance class in college. Sorry I can't help you. I relied way too much on my calculator for finance and can't even tell you where to begin. Good luck.
new question: A lottery winner receives $20 million in equal payments spread out over 20 years. Find the present value of the winnings.
What is this, Finance 101? You at least need to give us a discount rate for this one, pal. Don't you have a financial calculator? This is as easy an annuity problem as you could possibly devise.
