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If a bond with face value of 1100 and a coupon rate of 8 is selling at a price of 970 is the bond's yield to maturity more or less than 8 and what is the current yield?
Wiki User
∙ 16y ago
When a bond sells at a discount, the yield is higher than the coupon rate. Your income is 1,100 x 8% = 88. You invested 970. 88/970 = 9.07% yield.
Wiki User
∙ 16y ago
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What is the taxation of zero coupon bonds held to maturity?
Zero coupon bonds issued by the US Treasury are issued at a discount to face value. An investor holding zero coupon bonds is paid the full face value when the zero coupon bond matures. The difference between the purchase price and the maturity value is know as the original issue discount which represents the interest earned on the zero coupon bond. Although a zero coupon bond does not pay annual interest, an investor must pay taxes each year based on the imputed receipt of income. Since the investor is not receiving interest payments during the life of the bond, taxes would be paid on interest income not actually received until bond maturity. Due to the yearly tax liability on imputed interest, it makes sense for most investors to hold zero coupon bonds in a tax deferred retirement account. The interest earned on zero coupon bonds issued by the US Treasury are exempt from state and local taxes.
1 Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are know as?
callable bonds
What is definition of revenue refunding bond?
New bonds issued to redeem (retire) previously issued bonds, on their maturity or by a call. Refunding bonds may be sold for cash or exchanged for the older bonds.
What type of tax exemption do savings bonds have?
The interest earned on savings bonds is exempt from all state and local income tax and is deferred for federal income tax until sale or maturity.
Is bonds payable a noncurrent liability?
no, it is current liability
What are the different types of yields on bonds?
* yield to worst (to maturity or to call date) * current yield * coupon yield
If a bond's yield to maturity exceeds its coupon rate does the bond's current yield must also exceed its coupon rate?
No......The price of the bonds will be less than par or 1,000.....
The 6 percent annual coupon bonds of Greentree Inc are selling for 1020 have a face value of 1000 and have a yield to maturity of 5.43 percent How many years will it be until these bonds matu?
4 years
When a bonds yield to maturity is greater than the bonds coupon rate the bond?
When the yield of a bond exceeds it coupon rate, the price will be below 'par' which is usually $100.
What one of these is not usually associated with bonds a coupon rate b maturity value c face amount d maturity rate?
Coupons, face amount, maturity value and maturity rate all are associated with bonds. Coupons are a type of bond and the face amount tells how much the coupon is worth until it matures, gaining interest.
How do bondholders get a return on zero coupon bonds?
Zero coupon bonds do not pay interest and are therefore sold at a steep discount to face value depending on the maturity date of the bond. Due to the time value of money, the discount on a 30 year zero coupon bond will be much greater than on a 10 year zero coupon bond. At maturity bondholders will receive the full face value of the bond which provides bondholders a return. For example, a 30 year zero coupon bond with a face value of $1,000 and sold for $500 would return a $500 profit after 30 years. Holders of zero coupon bonds can sell the bonds at any time before maturity. If an investor bought zero coupon bonds prior to a steep drop in interest rates, the value of the zero coupon bonds would increase and could be sold at a profit.
Compute the current price of the bonds if the present yield to maturity is?
Compute the current price of the bond if percent yield to maturity is 7%
What are the basic components of bonds?
Coupon - periodical cash payment Corpus or Face Value - amount paid at maturity
What is non-zero coupon bonds?
if a bond has finite maturity or limited maturity then we must consider not only the interest rate stream but also the maturity value (face value).regardsSajida Gul
What is the advantage of buying zero-coupon bonds?
The advantage of buying zero-coupon bonds is that when they reach maturity, the investor then receives the full face value of the bond. These bonds became popular in the 1980's even though they were first released in the 1960's.
Why does maturity date change?
It changes when the issuer does not have the money to pay back the principal and wants to still give out coupon on the bonds.
Yest Corporation's bonds have a 15 year maturity a 7 percent semiannual coupon and a par value of 1000?
$10008.65
