Question

In: Finance

Again Inc. bonds have a par value of $1,000, 33 years to maturity and a coupon...

Again Inc. bonds have a par value of $1,000, 33 years to maturity and a coupon rate of 12% paid semiannually. The bonds are currently selling for $1,160. The bonds may be called in 4 years for 112 per 100 of par. What is your expected rate of return if the bond is called in 4 years? (yield to call) I don't know what I'm doing wrong plz do it in excel using the yield function. thank you

Solutions

Expert Solution

FV = 1000 * 112 / 100 = 1120
PV = 1160
Nper = 4 * 2 = 8
PMT = 1000 * 12% / 2 = 60

Yield to call can be calculated by using the following excel formula:
=RATE(nper,pmt,pv,fv)
=RATE(8,60,-1160,1120)*2
= 9.62%


Yield to call = 9.62%

OR

By using YIELD Function:

EXCEL FORMULA:

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

Again, Inc. bonds have a par value of $1,000, a 29 year maturity, and an annual...
Again, Inc. bonds have a par value of $1,000, a 29 year maturity, and an annual coupon rate of 12.0% with annual coupon payments. The bonds are currently selling for $1,177. The bonds may be called in 6 years for 112.0% of par. What quoted annual rate of return do you expect to earn if you buy the bonds and company calls them when possible? Question 14 options: 11.91% 10.10% 8.71% 9.56% 12.92%
(Bonds) A zero-coupon bond has a $1,000 par value, 9 years to maturity, and sells for...
(Bonds) A zero-coupon bond has a $1,000 par value, 9 years to maturity, and sells for $527.82. What is its yield to maturity? Assume annual compounding. Record your answer to the nearest 0.01% (no % symbol). E.g., if your answer is 3.455%, record it as 3.46.
Consider the following $1,000 par value zero-coupon bonds: Bond Years until Maturity Yield to Maturity A...
Consider the following $1,000 par value zero-coupon bonds: Bond Years until Maturity Yield to Maturity A 1 7.25 % B 2 8.25 C 3 8.75 D 4 9.25 a. According to the expectations hypothesis, what is the market’s expectation of the one-year interest rate three years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What are the expected values of next year’s yields on bonds with maturities of (a) 1 year; (b) 2...
Consider the following $1,000 par value zero-coupon bonds: Bond Years until Maturity Yield to Maturity A...
Consider the following $1,000 par value zero-coupon bonds: Bond Years until Maturity Yield to Maturity A 1 8.50 % B 2 9.50 C 3 10.00 D 4 10.50 a. According to the expectations hypothesis, what is the market’s expectation of the one-year interest rate three years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What are the expected values of next year’s yields on bonds with maturities of (a) 1 year; (b) 2...
Consider the following $1,000 par value zero-coupon bonds: Bond Years Until Maturity Yield to Maturity A...
Consider the following $1,000 par value zero-coupon bonds: Bond Years Until Maturity Yield to Maturity A 1 7.75% B 2 8.75 C 3 9.25 D 4 9.75 a. According to the expectations hypothesis, what is the market’s expectation of the one-year interest rate three years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Interest rate ?% b. What are the expected values of next year’s yields on bonds with maturities of (a) 1 year;...
Company X’s bonds have 25 years remaining to maturity. They have a $1,000 par value, the...
Company X’s bonds have 25 years remaining to maturity. They have a $1,000 par value, the coupon interest rate is 7%, and the yield to maturity is 10%. If you know that interest is paid annually, what is the bond’s current market price? $ 658.32 $ 727.69 $ 872.58 $ 987.78 $ 1,000 Najd company decided to issue preferred stock that would pay an annual dividend of $10.00 and that the issue price was $200.00 per share. What would be...
Edgehill, Inc. has 275,000 bonds outstanding. The bonds have a par value of $1,000, a coupon...
Edgehill, Inc. has 275,000 bonds outstanding. The bonds have a par value of $1,000, a coupon rate of 5.2 percent paid semiannually, and 9 years to maturity. The current YTM on the bonds is 5.6 percent. The company also has 10 million shares of stock outstanding, with a market price of $21 per share. What is the company’s market value debt-equity ratio? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
Frusciante, Inc. has 285,000 bonds outstanding. The bonds have a par value of $1,000, a coupon...
Frusciante, Inc. has 285,000 bonds outstanding. The bonds have a par value of $1,000, a coupon rate of 6.9 percent paid semiannually, and 7 years to maturity. The current YTM on the bonds is 6.4 percent. The company also has 9 million shares of stock outstanding, with a market price of $27 per share. What is the company’s market value debt–equity ratio?
(Bonds) A bond with a $1,000 par, 4 years to maturity, a coupon rate of 5%,...
(Bonds) A bond with a $1,000 par, 4 years to maturity, a coupon rate of 5%, and annual payments has a yield to maturity of 4.2%. What will be the percentage change in the bond price if the yield changes instantaneously to 4.6%? (If your answer is, e.g., -1.123%, enter it as -1.123. If the sign of the price change is incorrect, no credit will be given.)
(Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 6%,...
(Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 6%, and annual payments has a yield to maturity of 3.8%. What will be the percentage change in the bond price if the yield changes instantaneously to 5.3%? (If your answer is, e.g., -1.123%, enter it as -1.123. If the sign of the price change is incorrect, no credit will be given.)
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT