1. Jill has a bond with a face value of $1,000. The bond has a coupon rate of 6%. Find her current yield if the market price of the bond is $1,027.

2. Calculate the annual interest you receive on a $1000 Treasury bond with a current yield of 1.5% that is quoted at 98 points.

I just need some one to help me with the formula and setting these up im not sure how to do that.

Thanks!

1. To calculate the current yield, you can use the following formula:

Current Yield = (Annual Interest Payment / Market Price) * 100

Since the face value of Jill's bond is $1,000 and the coupon rate is 6%, the annual interest payment can be calculated as follows:

Annual Interest Payment = Face Value * Coupon Rate

Annual Interest Payment = $1,000 * 0.06 = $60

Now, substitute the values into the current yield formula:

Current Yield = ($60 / $1,027) * 100

Current Yield ≈ 5.84%

Therefore, Jill's current yield is approximately 5.84%.

2. To calculate the annual interest on a Treasury bond with a current yield of 1.5% quoted at 98 points, you can use the following formula:

Annual Interest Payment = (Current Yield * Market Price) / 100

The market price of the bond is 98% of $1,000, which is $980. Now substitute the values into the formula:

Annual Interest Payment = (1.5 * $980) / 100

Annual Interest Payment = $14.70

Therefore, the annual interest you would receive on a $1,000 Treasury bond with a current yield of 1.5% quoted at 98 points is $14.70.

Sure! I'd be happy to help you understand how to calculate the current yield and annual interest on bonds.

To calculate the current yield, you can use the following formula:

Current Yield = Annual Coupon Payment / Market Price of the bond

Now, let's apply this formula to the first question.

1. Jill's bond has a face value of $1,000 and a coupon rate of 6%. This means the annual coupon payment is $1,000 * 6% = $60.

The market price of the bond is $1,027.

Plugging these values into the formula, we get:

Current Yield = $60 / $1,027

Calculating this, the current yield is approximately 0.0584 or 5.84%.

Now, let's move on to the second question.

2. This time, we are given the current yield of 1.5% and the bond is quoted at 98 points.

To calculate the annual interest, we need to find the annual coupon payment.

Let's say the annual coupon payment is X.

First, convert the quoted price into a decimal:

Quoted Price = 98 / 100 = 0.98

Then, use the formula for current yield:

Current Yield = X / $1,000

Rearranging the formula to solve for X:

X = Current Yield * $1,000

Plugging in the values, we get:

X = 1.5% * $1,000 = $15

So, the annual interest you would receive on the Treasury bond is $15.

I hope this helps you understand how to calculate the current yield and annual interest on bonds!