What is the nominal annual yield on the bonds

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The Great Northern Specific Railway has noncallable, perpetual bonds outstanding. When originally issued, the perpetual bonds sold for $955 per bond; today (January 1) their current market price is $1,120 per bond. The company pays a semiannual interest payment of $45 per bond on June 30 and December 31 each year.

Question a. As of today (January 1), what is the implied semiannual yield on these bonds?

Question b. Using your answer to Part (a), what is the (nominal annual) yield on these bonds? The (effective annual) yield on these bonds?

Reference no: EM132504503

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