Fundamentals of Financial Management (Concise 6th Edition)

Calculation

of

Current

Yields,

Capital

Gains

Yields,

and

Total

Returns

for

7%,

10%,

and

13%

Coupon

Bonds

When

the

Market

Rate

Remains

Constant

at

10%

T

a

b

le

7

-

1

7%

COUPON

BOND

10%

COUPON

BOND

13%

COUPON

BOND

Number

of

Years

Until

Maturity

Price

a

Expected Current

Yield

b

Expected Capital

Gains Yield

c

Expected

Total Return

d

Price

a

Expected Current

Yield

b

Expected Capital

Gains Yield

c

Expected

Total Return

d

Price

a

Expected Current

Yield

b

Expected Capital

Gains Yield

c

Expected

Total Return

d

15

$

771.82

9.1%

0.9%

10.0%

$1,000.00

10.0%

0.0%

10.0%

$1,228.18

10.6%

$

0.6%

10.0%

14

779.00

9.0

1.0

10.0

1,000.00

10.0

0.0

10.0

1,221.00

10.6

$

0.6

10.0

13

786.90

8.9

1.1

10.0

1,000.00

10.0

0.0

10.0

1,213.10

10.7

$

0.7

10.0

12

795.59

8.8

1.2

10.0

1,000.00

10.0

0.0

10.0

1,204.41

10.8

$

0.8

10.0

11

805.15

8.7

1.3

10.0

1,000.00

10.0

0.0

10.0

1,194.85

10.9

$

0.9

10.0

10

815.66

8.6

1.4

10.0

1,000.00

10.0

0.0

10.0

1,184.34

11.0

$

1.0

10.0

9

827.23

8.5

1.5

10.0

1,000.00

10.0

0.0

10.0

1,172.77

11.1

$

1.1

10.0

8

839.95

8.3

1.7

10.0

1,000.00

10.0

0.0

10.0

1,160.05

11.2

$

1.2

10.0

7

853.95

8.2

1.8

10.0

1,000.00

10.0

0.0

10.0

1,146.05

11.3

$

1.3

10.0

6

869.34

8.1

1.9

10.0

1,000.00

10.0

0.0

10.0

1,130.66

11.5

$

1.5

10.0

5

886.28

7.9

2.1

10.0

1,000.00

10.0

0.0

10.0

1,113.72

11.7

$

1.7

10.0

4

904.90

7.7

2.3

10.0

1,000.00

10.0

0.0

10.0

1,095.10

11.9

$

1.9

10.0

3

925.39

7.6

2.4

10.0

1,000.00

10.0

0.0

10.0

1,074.61

12.1

$

2.1

10.0

2

947.93

7.4

2.6

10.0

1,000.00

10.0

0.0

10.0

1,052.07

12.4

$

2.4

10.0

1

972.73

7.2

2.8

10.0

1,000.00

10.0

0.0

10.0

1,027.27

12.7

$

2.7

10.0

0

1,000.00

1,000.00

1,000.00

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