Question

In: Finance

The market price is ​$1,075 for a 19​-year bond ​($1,000 par​ value) that pays 11 percent...

The market price is ​$1,075 for a 19​-year bond ​($1,000 par​ value) that pays 11 percent annual​ interest, but makes interest payments on a semiannual basis ​(5.5 percent​ semiannually). What is the​ bond's yield to​ maturity?

Solutions

Expert Solution

he yield to maturity of the bond can be calculated with the help of RATE function of Excel

Inputs requied:

N = 19 * 2 = 38

FV = 1000

PMT= 11%/2 * 1000 = 55

PV = 1075

The Rate function is:

=RATE(38,55,-1075,1000,0,0.11)

= 0.0505

The above calculated is the semi annual rate

Annual rate = Semi annual rate * 2

= 0.0505 * 2

= 0.101

Or 10.10%

YTM = 10.10%

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

The market price is ​$900 for a 16​-year bond ​($1,000 par​ value) that pays 12 percent...
The market price is ​$900 for a 16​-year bond ​($1,000 par​ value) that pays 12 percent annual​ interest, but makes interest payments on a semiannual basis ​(6 percent​ semiannually). What is the​ bond's yield to​ maturity?
The market price is ​$1,050 for a 9​-year bond ​($1,000 par​value) that pays 9 percent...
The market price is $1,050 for a 9-year bond ($1,000 par value) that pays 9 percent annual interest, but makes interest payments on a semiannual basis (4.5 percent semiannually). What is the bond's yield to maturity?
The market price is $850 for a 10​-year bond ($1,000 par​ value) that pays 9 percent...
The market price is $850 for a 10​-year bond ($1,000 par​ value) that pays 9 percent annual​ interest but makes interest payments on a semiannual basis (4.5 percent​ semiannually). What is the​ bond's yield to​ maturity? The​ bond's yield to maturity is ____​ (Round to two decimal​ places.) 2. (Bond valuation)​Fingen's 16​-year, $1,000 par value bonds pay 14 percent interest annually. The market price of the bonds is $870 and the​ market's required yield to maturity on a​ comparable-risk bond...
The market price is ​$725 for a 9​-year bond ​($1000 par​ value) that pays 11 percent...
The market price is ​$725 for a 9​-year bond ​($1000 par​ value) that pays 11 percent annual​ interest, but makes interest payments on a semiannual basis ​(5.5 percent​ semiannually). What is the​ bond's yield to​ maturity? (round to the nearest cent)
The market price is ​$1,200 for a 9 ​-year bond ​($1,000 par​ value) that pays 8...
The market price is ​$1,200 for a 9 ​-year bond ​($1,000 par​ value) that pays 8 percent annual​ interest, but makes interest payments on a semiannual basis ​(4 percent​ semiannually). What is the​ bond's yield to​ maturity?
Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 11 percent annual interest....
Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 11 percent annual interest. The current yield to maturity on such bonds in the market is 10 percent. Compute the price of the bonds for these maturity dates: 25 years 15 years 4 years
Fingen's 15​-year, ​$1,000  par value bonds pay 11 percent interest annually. The market price of the bonds...
Fingen's 15​-year, ​$1,000  par value bonds pay 11 percent interest annually. The market price of the bonds is ​$920 and the​ market's required yield to maturity on a​ comparable-risk bond is 14 percent. a.  Compute the​ bond's yield to maturity. b.  Determine the value of the bond to​ you, given your required rate of return. c.  Should you purchase the​ bond?
Compute the price of a $1,000 par value, 11 percent (semi-annual payment) coupon bond with 22...
Compute the price of a $1,000 par value, 11 percent (semi-annual payment) coupon bond with 22 years remaining until maturity assuming that the bond's yield to maturity is 17 percent? (Round your answer to 2 decimal places and record your answer without dollar sign or commas).
You own a 20-year, $1,000 par value bond paying 6 percent interest annually. The market price...
You own a 20-year, $1,000 par value bond paying 6 percent interest annually. The market price of the bond is $750, and your required rate of return is 10 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return. c. Should you sell the bond or continue to own it?
You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price...
You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $850 and your required rate of return is 12 percent. a. Compute the​ bond's expected rate of return. b. Determine the value of the bond to​ you, given your required rate of return. c. Should you sell the bond or continue to own​ it?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT