Examine the brokerage statement contained in the case. How would the stated “estimated yield” compare to the yield to maturity for an investor who purchased the bonds on the statement date at current market prices?
Read the case Calculating & Disclosing Bond Yields: Ethics and Mechanics. Be sure to read the Notes at the bottom of the case, including: “The term “estimated yield” is essentially synonymous to the term “current yield.” Textbooks define current yield as the bond’s coupon payment divided by the current market value of the bond. Brokerage […]