Question
In: Finance
A portfolio has 3 bonds with semiannual payments of interest. Bond 1 Bond 2 Bond 3...
A portfolio has 3 bonds with semiannual payments of interest.
| Bond 1 | Bond 2 | Bond 3 | |
| Face Value | 11000 | 15000 | 12000 |
| Coupon | 12% | 15% | 10% |
| Maturity (Yrs) | 3 | 5 | 4 |
| Yield | 10% | 9% | 7% |
Calculate the yield for this portfolio. (assume that interest is paid in the same dates for the 3 bonds).
Solutions
Expert Solution
| Bond 1 | Bond 2 | Bond 3 | |
| Face Value | 11000 | 15000 | 12000 |
| Face Value ($) | 1000 | 1000 | 1000 |
| No of Bonds = Tptal Face Value / Face value / Bond | 11 | 15 | 12 |
| Coupon | 12% | 15% | 10% |
| Coupon Amt($) = Coupon % x Face Value | 120.00 | 150.00 | 100.00 |
| Maturity (Yrs) | 3 | 5 | 4 |
| Payment Semiannual | Semiannual | Semiannual | Semiannual |
| Nof couopon Payments | 6 | 10 | 8 |
| Yield | 10% | 9% | 7% |
| Effective Yield / Semiaanual = Yield / 2 | 0.05 | 0.045 | 0.035 |
| Current Price = | |||
| PV(0.05,6,-120)+1000/(1.05)^6 | 1355 | ||
| Current price (bond 2) | 1831 | ||
| Current price (bond 3) | 1447 | ||
| Market Value = CurrenT price x No of Bond | 14908 | 27463 | 17362 |
| Total Value of Bond | 59732 | ||
| (Total Value = mkt value of bond 1 + 2 + 3) | |||
| Proportion of Bond | 25% | 46% | 29% |
| [14908/59732 = 25%] | |||
| Portfolio Return = Bond proportion in portfolio X respetive return | |||
| (25% x 10% + 46% x 9% + 29% x 7%) | 8.67% | ||
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jeff jeffy answered 2 years agoRelated Solutions
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A.
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the following
table.
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Price Quote
Maturity
Face Value
1
6.5
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106.46
5
years
$
45,000,000
2
8.0
115.02
8
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3
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If the corporate tax rate is 25 percent, what is the aftertax
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calculations and enter your...
A. Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are...
A.
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the following
table. If the corporate tax rate is 33 percent, what is the
aftertax cost of Ying's debt?
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
5.9%
110
8 years
$ 23,000,000
2
7.4
118
11 years
36,000,000
3
6.5
112
26 years
49,000,000
4
7.5 ...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the table
below.
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
8.70%
105.2
7 years
$22,000,000
2
7.00
95.2
10 years
42,000,000
3
8.40
104.0
17.5 years
47,000,000
4
8.90
105.9
27 years
62,000,000
If the corporate tax rate is 22 percent, what is the aftertax
cost of the company’s debt? (Do not round intermediate
calculations and enter your answer as...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the following
table. If the corporate tax rate is 32 percent, what is the
aftertax cost of Ying's debt? (Do not round your intermediate
calculations.)
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
6.3%
102
5 years
$ 17,000,000
2
7
110
8 years
43,000,000
3
5.5
105
20 years
41,000,000...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the following
table. If the corporate tax rate is 35 percent, what is the
aftertax cost of Ying's debt? (Do not round your
intermediate calculations.)
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
5.8%
105
5 years
$ 19,000,000
2
6.4
115
9 years
45,000,000
3
5.8
108
19 years
...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the following
table.
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
6.4
%
106.26
5
years
$
44,000,000
2
7.9
114.92
8
years
39,000,000
3
7.6
113.47
15.5
years
59,000,000
4
7.2
102.71
25
years
54,000,000
If the corporate tax rate is 35 percent, what is the aftertax
cost of the company’s debt? (Do not round intermediate
calculations. Enter your answer as...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the table
below. Bond Coupon Rate Price Quote Maturity Face Value 1 8.90 %
105.4 3 years $ 24,000,000 2 6.60 95.0 6 years 44,000,000 3 8.60
104.2 13.5 years 49,000,000 4 9.10 106.1 23 years 64,000,000 If the
corporate tax rate is 35 percent, what is the aftertax cost of the
company’s debt? (Do not round intermediate calculations and enter
your answer...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the table
below.
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
8.60%
106.1
6 years
$20,000,000
2
6.60
94.3
9 years
38,000,000
3
8.30
104.9
16.5 years
43,000,000
4
8.80
94.7
26 years
58,000,000
If the corporate tax rate is 21 percent, what is the aftertax
cost of the company’s debt? (Do not round intermediate
calculations and enter your answer as...
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...
Ying Import has several bond issues outstanding, each making
semiannual interest payments. The bonds are listed in the following
table.
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
5.00
%
103.18
5
years
$
45,000,000
2
7.10
112.80
8
years
40,000,000
3
6.30
107.45
15
1/2 years
50,000,000
4
5.90
102.75
25
years
65,000,000
If the corporate tax rate is 22 percent, what is the aftertax
cost of the company's debt? (Do not round intermediate
calculations and enter your...
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