Question
In: Finance
A bond has 1,000 par value , 17 years to maturity and pays a coupon of...
A
bond has 1,000 par value , 17 years to maturity and pays a coupon
of 5.25 per year semi annually. The bond is callable in 7 years at
105% of its par value. if the blnfs yield to call is 5.06% per
year, what is its annual yield to maturity
Solutions
Expert Solution
Price of the bond today
| Period | CF | [email protected]% | Disc CF |
| 1 | $ 26.25 | 0.9753 | $ 25.60 |
| 2 | $ 26.25 | 0.9513 | $ 24.97 |
| 3 | $ 26.25 | 0.9278 | $ 24.35 |
| 4 | $ 26.25 | 0.9049 | $ 23.75 |
| 5 | $ 26.25 | 0.8826 | $ 23.17 |
| 6 | $ 26.25 | 0.8608 | $ 22.60 |
| 7 | $ 26.25 | 0.8395 | $ 22.04 |
| 8 | $ 26.25 | 0.8188 | $ 21.49 |
| 9 | $ 26.25 | 0.7986 | $ 20.96 |
| 10 | $ 26.25 | 0.7789 | $ 20.45 |
| 11 | $ 26.25 | 0.7597 | $ 19.94 |
| 12 | $ 26.25 | 0.7409 | $ 19.45 |
| 13 | $ 26.25 | 0.7227 | $ 18.97 |
| 14 | $ 26.25 | 0.7048 | $ 18.50 |
| 14 | $ 1,050.00 | 0.7048 | $ 740.08 |
| Price of the bond | $1,046.33 |
YTM
| Period | CF | PVF @2% | Disc CF | PVF @2.5% | Disc CF |
| 0 | $ -1,046.33 | 1.0000 | $ -1,046.33 | 1.0000 | $ -1,046.33 |
| 1 | $ 26.25 | 0.9804 | $ 25.74 | 0.9756 | $ 25.61 |
| 2 | $ 26.25 | 0.9612 | $ 25.23 | 0.9518 | $ 24.99 |
| 3 | $ 26.25 | 0.9423 | $ 24.74 | 0.9286 | $ 24.38 |
| 4 | $ 26.25 | 0.9238 | $ 24.25 | 0.9060 | $ 23.78 |
| 5 | $ 26.25 | 0.9057 | $ 23.78 | 0.8839 | $ 23.20 |
| 6 | $ 26.25 | 0.8880 | $ 23.31 | 0.8623 | $ 22.64 |
| 7 | $ 26.25 | 0.8706 | $ 22.85 | 0.8413 | $ 22.08 |
| 8 | $ 26.25 | 0.8535 | $ 22.40 | 0.8207 | $ 21.54 |
| 9 | $ 26.25 | 0.8368 | $ 21.96 | 0.8007 | $ 21.02 |
| 10 | $ 26.25 | 0.8203 | $ 21.53 | 0.7812 | $ 20.51 |
| 11 | $ 26.25 | 0.8043 | $ 21.11 | 0.7621 | $ 20.01 |
| 12 | $ 26.25 | 0.7885 | $ 20.70 | 0.7436 | $ 19.52 |
| 13 | $ 26.25 | 0.7730 | $ 20.29 | 0.7254 | $ 19.04 |
| 14 | $ 26.25 | 0.7579 | $ 19.89 | 0.7077 | $ 18.58 |
| 15 | $ 26.25 | 0.7430 | $ 19.50 | 0.6905 | $ 18.12 |
| 16 | $ 26.25 | 0.7284 | $ 19.12 | 0.6736 | $ 17.68 |
| 17 | $ 26.25 | 0.7142 | $ 18.75 | 0.6572 | $ 17.25 |
| 18 | $ 26.25 | 0.7002 | $ 18.38 | 0.6412 | $ 16.83 |
| 19 | $ 26.25 | 0.6864 | $ 18.02 | 0.6255 | $ 16.42 |
| 20 | $ 26.25 | 0.6730 | $ 17.67 | 0.6103 | $ 16.02 |
| 21 | $ 26.25 | 0.6598 | $ 17.32 | 0.5954 | $ 15.63 |
| 22 | $ 26.25 | 0.6468 | $ 16.98 | 0.5809 | $ 15.25 |
| 23 | $ 26.25 | 0.6342 | $ 16.65 | 0.5667 | $ 14.88 |
| 24 | $ 26.25 | 0.6217 | $ 16.32 | 0.5529 | $ 14.51 |
| 25 | $ 26.25 | 0.6095 | $ 16.00 | 0.5394 | $ 14.16 |
| 26 | $ 26.25 | 0.5976 | $ 15.69 | 0.5262 | $ 13.81 |
| 27 | $ 26.25 | 0.5859 | $ 15.38 | 0.5134 | $ 13.48 |
| 28 | $ 26.25 | 0.5744 | $ 15.08 | 0.5009 | $ 13.15 |
| 29 | $ 26.25 | 0.5631 | $ 14.78 | 0.4887 | $ 12.83 |
| 30 | $ 26.25 | 0.5521 |
 jeff jeffy answered 2 years agoRelated SolutionsA bond has a $1,000 par value, 14 years to maturity, and pays a coupon of...A bond has a $1,000 par value, 14 years to maturity, and pays a
coupon of 8.25% per year, annually. You expect the bond’s yield to
maturity to be 7.0% per year in five years. If you plan to buy the
bond today and sell it in five years, what is the most that you can
pay for the bond and still earn at least a 9.0% per year return on
your investment?
A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid annually....A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid annually. What is the value of the bond if your
required rate of return is 5%?
2. A $1,000 par-value bond with 5 years of
maturity pays a 5% coupon rate, paid semi-annually. What is the
value of the bond if your required rate of return is 5%?
3. A $1,000 par-value bond with 5
years of maturity pays a 5% coupon rate, paid semi-annually. What...
1. A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid...1. A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid annually. What is the value of the bond if your
required rate of return is 5%?
2. A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid semi-annually. What is the value of the bond if
your required rate of return is 5%?
3. A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid...
A coupon bond that pays interest annually has a par value of $1,000, matures in 10 years, and has a yield to maturity of 8%.A coupon bond that pays interest annually has a par value of
$1,000, matures in 10 years, and has a yield to maturity of 8%.
Calculate the intrinsic value (price) of the bond today if the
coupon rate is 9%.
A bond has a $1,000 par value, 12 years to maturity, and an 8% annual coupon...A bond has a $1,000 par value, 12 years to maturity, and an 8%
annual coupon and sells for $980.
a. What is its yield to maturity (YTM)? Round your answer to two
decimal places.
b. Assume that the yield to maturity remains constant for the
next three years. What will the price be 3 years from today? Do not
round intermediate calculations. Round your answer to the nearest
cent.
BP has a bond outstanding with 15 years to maturity, a $1,000 par value, a coupon...BP has a bond outstanding with 15 years to maturity, a $1,000
par value, a coupon rate of 6.8%, with coupons paid semiannually,
and a price of 95.49 (percent of par).
What is the cost of debt?
answer 3+ decimals
A bond has a $1,000 par value, 12 years to maturity, and a 9% annual coupon...A bond has a $1,000 par value, 12 years to maturity, and a 9%
annual coupon and sells for $1,110.
What is its yield to maturity (YTM)? Round your answer to two
decimal places.
%
Assume that the yield to maturity remains constant for the next
2 years. What will the price be 2 years from today? Do not round
intermediate calculations. Round your answer to the nearest
cent.
$
bond has a $1,000 par value, 10 years to maturity, and a 8% annual coupon and...bond has a $1,000 par value, 10 years to maturity, and a 8%
annual coupon and sells for $980.
What is its yield to maturity (YTM)? Round your answer to two
decimal places.
b)Assume that the yield to maturity remains constant for the
next 3 years. What will the price be 3 years from today? Do not
round intermediate calculations. Round your answer to the nearest
cent
2)Nesmith Corporation's outstanding bonds have a $1,000 par
value, a 8% semiannual coupon,...
A bond has a $1,000 par value, 15 years to maturity, and an 8% annual coupon...A bond has a $1,000 par value, 15 years to maturity, and an 8%
annual coupon and sells for $1,080. What is its yield to maturity
(YTM)? Round your answer to two decimal places. % Assume that the
yield to maturity remains constant for the next three years. What
will the price be 3 years from today? Do not round intermediate
calculations. Round your answer to the nearest cent. $
A bond has a $1,000 par value, 12 years to maturity, and a 8% annual coupon...A bond has a $1,000 par value, 12 years to maturity, and a 8%
annual coupon and sells for $980.
What is its yield to maturity (YTM)? Round your answer to two
decimal places.
Assume that the yield to maturity remains constant for the next
5 years. What will the price be 5 years from today? Do not round
intermediate calculations. Round your answer to the nearest
cent.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
ADVERTISEMENT
|