Question

In: Finance

?(Yield to maturity?) Assume the market price of a 7?-year bond for Margaret Inc. is ?$900?,...

?(Yield to maturity?) Assume the market price of a 7?-year bond for Margaret Inc. is ?$900?, and it has a par value of $ 1,000. The bond has an annual interest rate of 7?% that is paid semiannually. What is the yield to maturity of the? bond?

Solutions

Expert Solution

YTM = The rate at which PV of Cash Inflows are equal to Bond price.

YTM = Rate at which least +ve NPV + [ NPV at that rate / change in NPV due to inc in rate by 0.5% ] * 0.5%

= 4% + [ 47.18 / 49.41 ] * 0.5%

= 4% + 0.48%

= 4.48%

YTM per anum = 4.48% * 2

= 8.96%

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

​(Yield to​ maturity) A​ bond's market price is ​$900. It has a ​$1,000 par​ value, will...
​(Yield to​ maturity) A​ bond's market price is ​$900. It has a ​$1,000 par​ value, will mature in 8 ​years, and has a coupon interest rate of 8 percent annual​ interest, but makes its interest payments semiannually. What is the​ bond's yield to​ maturity? % ​ (Round to two decimal​ places.) What happens to the​ bond's yield to maturity if the bond matures in 16 ​years? % ​ (Round to two decimal​ places.) What if it matures in 4 ​years?...
7. What is the current price of 10-year bond, with 10% yield to maturity, 8% annual...
7. What is the current price of 10-year bond, with 10% yield to maturity, 8% annual coupon rate and $1,000 par value?
A 14.55-year maturity zero-coupon bond selling at a yield to maturity of 7% (effective annual yield)...
A 14.55-year maturity zero-coupon bond selling at a yield to maturity of 7% (effective annual yield) has convexity of 197.7 and modified duration of 13.60 years. A 40-year maturity 5% coupon bond making annual coupon payments also selling at a yield to maturity of 7% has nearly identical modified duration—-13.96 years—but considerably higher convexity of 338.8. a. Suppose the yield to maturity on both bonds increases to 8%. What will be the actual percentage capital loss on each bond? What...
 ​(Yield to​ maturity)  The market price is ​$775 for a 17​-year bond ​($1 comma 000 par​...
 ​(Yield to​ maturity)  The market price is ​$775 for a 17​-year bond ​($1 comma 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 nothing​%
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that coupon is paid semi-annually and face value is $1,000. (a) Calculate the price of the bond. (Keep 2 decimal places, e.g. 90.12) (b) Calculate the duration of the bond. (Keep 4 decimal places, e.g. 5.1234) (c) Calculate this bond's modified duration. (Keep 4 decimal places, e.g. 5.1234) (d) Assume that the bond's yield to maturity increases from 7% to 7.2%, estimate the new price...
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that coupon is paid semi-annually and face value is $1,000. (a) Calculate the price of the bond. (Keep 2 decimal places, e.g. 90.12) (b) Calculate the duration of the bond. (Keep 4 decimal places, e.g. 5.1234) (c) Calculate this bond's modified duration. (Keep 4 decimal places, e.g. 5.1234) (d) Assume that the bond's yield to maturity increases from 7% to 7.2%, estimate the new price...
Calculate the price of this bond: Yield = 5.55%, Time to maturity = 7 years, Coupon...
Calculate the price of this bond: Yield = 5.55%, Time to maturity = 7 years, Coupon rate = 4.6%, Pays = annually. 948.85 990.87 690.83 946.11 None of the above
A ten year bond has a coupon rate of 7% and a yield to maturity of...
A ten year bond has a coupon rate of 7% and a yield to maturity of 9%, will you be willing to pay $1100 for this bond. Please explain.
You buy a five-year bond that has a 7% yield to maturity and a 7% coupon...
You buy a five-year bond that has a 7% yield to maturity and a 7% coupon paid annually. In one year, promised yields to maturity have fallen to 6%. What is your holding period return? Answer in percentages with two decimal places.
The market price of a 18.00-year STRIPS is $386.00 The yield to maturity is ____%.
The market price of a 18.00-year STRIPS is $386.00 The yield to maturity is ____%.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT