Municipal Bond Yield Calculations

Professor Williams explains the calculation of various yields for a 3.9% coupon municipal bond with 15 years to maturity and a price quote of 104.4. The video covers the calculation of current yield, yield to maturity, taxable yield, and yield to call, using a BA2 Plus calculator. The bond is callable in eight years with a premium of one-year coupon payments, and the calculations assume semiannual payments with a par value of $5,000.

What is the coupon rate of the municipal bond discussed?

• 3.9%

• 4.5%

• 3.5%

• 5.0%

How many years are left to maturity for the bond?

• 15 years

• 8 years

• 20 years

• 10 years

What is the par value of the bond?

• $10,000

• $2,000

• $5,000

• $1,000

How is the current yield calculated?

• Bond price divided by coupon rate

• Coupon rate multiplied by bond price

• Coupon rate divided by bond price

• Bond price minus coupon rate

What is the current yield of the bond?

• 3.90%

• 3.50%

• 4.00%

• 3.73%

What is the first step in calculating yield to maturity?

• Calculate the present value

• Compute the payment amount

• Find the future value

• Determine the coupon rate

What is the yield to maturity of the bond?

• 3.52%

• 3.73%

• 4.00%

• 3.90%

How is taxable yield calculated?

• Yield to maturity plus tax rate

• Yield to maturity divided by (1 - tax rate)

• Yield to maturity multiplied by tax rate

• Yield to maturity divided by tax rate

What is the taxable yield of the bond?

• 5.50%

• 4.00%

• 4.50%

• 5.03%

What is the call premium for the bond?

• No premium

• Half a year of coupon payments

• Two years of coupon payments

• One year of coupon payments