Colwood Corp. has 9.9% coupon bonds making annual payments with a YTM of 9.1%, current market...

Colwood Corp. has 9.9% coupon bonds making annual payments with a YTM of 9.1%, current market value of $1,057.70. How many years do these bonds have left until they mature?

Oak Bay Software has 9.3% coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for 106.9% of par.

What is the YTM? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

YTM %

What is the effective annual yield? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Effective annual yield %

Solutions

Expert Solution

1. No of years = 12.26 years

PMT	99	[1000*9.9%]
FV	1000
PV	1057.70
Rate	9.10%

No of years	12.26	[nper (rate, pmt, -pv,fv)]

2. YTM = 8.54%

NPER	36	[18*2]
FV	1000
PMT	47	[10009.3%1/2]
PV	1069	[1000*106.9%]

YTM	4.27%	[Rate ( nper, pmt,-pv,fv)]
YTC	8.54%	[4.27%*2]

Current yield = 47 / 1069 *2= 8.79%

Effective annual yield = [(1+8.79%/2)^2-1 ] = 8.99%

jeff jeffy answered 1 year ago

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