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Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for \$936.05. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is \$1,048.77, what is the yield that Trevor would earn by selling the bonds today?
Calculation of yield that Trevor would earn by selling the bonds today Semi annual Coupon rate = 8.4% Purchase Price of the bond 5years ago (P) = \$936.05 Current Price of the bond (F) = \$1,048.77 Maturity years of the bond = 10 Semi…

nual Interest of the bond (I) (\$1000 X 8.4%) 84 Yield of the bond = I+(F-P) n (F+P) 2 = 84+(\$1048.77-936.05) 10 (\$1048.77+936.05) 2 = \$95.27 \$992.41 = 9.60%

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