Question

In: Finance

Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $6,809.76. The bonds...

Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $6,809.76. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $10,390, what is the yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

Effective annual yield ? %

Solutions

Expert Solution

Yield is calculated using the RATE function as follows:

=RATE(nper,pmt,-pv,fv)

=RATE(10*2,8.4%/2*10000,-6809.76,10390)*2

=14.79%

Effective annual yield is:-

=(1+APR/n)^n-1

=(1+14.79%/2)^2-1

=15.34%

Where,

nper is no of periods the bond is held,

pmt is payment per period received,

pv is the purchase price,

fv is the selling price

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $974.70. The bonds...
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $974.70. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,000, what is the yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) Effective annual yield %
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $4,532.35. The bonds...
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $4,532.35. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $6,750, what is the yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) 1000
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $4,532.35. The bonds...
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $4,532.35. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $6,750, what is the yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Edward Lewis bought 10-year, 11.8 percent coupon bonds issued by the U.S. Treasury three years ago...
Edward Lewis bought 10-year, 11.8 percent coupon bonds issued by the U.S. Treasury three years ago at $915.06. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $811.17, what is his realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.) Realised rate of return
Berlin Corporation has $1,000 par value, 10-year bonds outstanding that were issued five years ago with...
Berlin Corporation has $1,000 par value, 10-year bonds outstanding that were issued five years ago with a stated annual coupon rate of 6% with annual interest payments. These bonds now have five years remaining to maturity. Please calculate the value of these bonds today if the market rate of return is 8%? 6%? And 4%? What can you say about the relationship between the coupon rate, the market rate, and the value of bonds?
Vision, Inc. issued semi-annual, 7.5%, 10 year bonds five years ago. Today’s market rate for Vision...
Vision, Inc. issued semi-annual, 7.5%, 10 year bonds five years ago. Today’s market rate for Vision is 9% and that rate is expected to be 12% three years from now. If an investor bought the bond today and sold it in three years, what would be her holding period yield? A. 7.70% B. 7.37% C. 6.70% D. 9.42%
Toys Co. issued 10-year bonds a year ago at a coupon rate of 10%. The bonds...
Toys Co. issued 10-year bonds a year ago at a coupon rate of 10%. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 9%, what is the current bond price?
SJU Corp. issued a 10-year bond at a price of $1,000 two years ago in the...
SJU Corp. issued a 10-year bond at a price of $1,000 two years ago in the US. The bond pays an annual coupon rate of 8% and the coupon interest is paid every six months. If the current market interest rate for this class of bond is 10%,       a. what is the value of the bond right now?       b. what was the market interest rate for the bond two year ago? Hint: no calculation         needed (20 pts)
Five years ago, Oleander, Inc. issued $10,000,000 worth of 15-year zero coupon bonds. The bonds carry...
Five years ago, Oleander, Inc. issued $10,000,000 worth of 15-year zero coupon bonds. The bonds carry a $5,000 par value. If the market prices the bonds to yield 5.5%, what is the current value of an Oleander bond? What was the value of the bond three years ago, assuming the required rate of return was the same as today? Please explain how to work this on a financial calculator.  
Five years ago Hemingway Inc. issued 6,000 30-year bonds with par values of $1,000 at a...
Five years ago Hemingway Inc. issued 6,000 30-year bonds with par values of $1,000 at a coupon rate of 8%. The bonds are now selling to yield 5%. The company also has 15,000 shares of preferred stock outstanding that pay a dividend of $6.50 per share. These are currently selling to yield 10%. Its common stock is selling at $21, and 200,000 shares are outstanding. Assume that the coupon payments are semi-annual. Calculate Hemingway's market value based capital structure. Round...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT