Question
In: Finance
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 6 years at $1,211, and currently sell at a price of $1,368.95.
a.) What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.
b.) What is their nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.
Solutions
Expert Solution
| a)Calculation of Yield to maturity | ||
| Interest as it is semi annual(1000*0.11/2) | 55 | |
| Face value | $1000 | |
| BOnd price | $1368.95 | |
| Years to maturity( as semi annual so 12*2) | 24 | |
| Yield to maturity= | Interest+ (Face value-bond price)/years to maturity | |
| (face value + bond price)/2 | ||
| 55+(1000-1368.95)/24 | ||
| (1000+1368.95)/2 | ||
| 3.35% | ||
| Yield to maturity for half year is 3.35% | ||
| Yield to maturity for full year is 6.70% | ||
| b)Calculation of Yield to call | ||
| Interest as it is semi annual(1000*0.11/2) | 55 | |
| Face value | $1000 | |
| Call price | $1211 | |
| Years to call( as semi annual so 6*2) | 12 | |
| Yield to call= | Interest+ (Face value-call price)/years to call | |
| (face value + call price)/2 | ||
| 55+(1000-1211)/12 | ||
| (1000+1211)/2 | ||
| 3.38% | ||
| Yield to call for half year is 3.35% | ||
| Yield to call for full year is 6.76% | ||
jeff jeffy answered 2 years agoRelated Solutions
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 6 years at
$1,200, and currently sell at a price of $1,348.76.
What is their nominal yield to maturity? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is their nominal yield to call? Do not round intermediate
calculations. Round your answer to two decimal places.
%
What return should investors expect to...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 8% semiannual coupon, are callable in 6 years at
$1,056.56, and currently sell at a price of $1,108.14. What are
their nominal yield to maturity and their nominal yield to call? Do
not round intermediate calculations. Round your answers to two
decimal places.
YTM: %
YTC: %
What return should investors expect to earn on these bonds?
Investors would not expect the bonds to be called...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 8% semiannual coupon, are callable in 6 years at
$1,069, and currently sell at a price of $1,130.81.
What is their nominal yield to maturity? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is their nominal yield to call? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What return should investors expect to...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 6 years at
$1,202.29, and currently sell at a price of $1,352.76. What are
their nominal yield to maturity and their nominal yield to call? Do
not round intermediate calculations. Round your answers to two
decimal places.
YTM: %
YTC: %
What return should investors expect to earn on these bonds?
Investors would not expect the bonds to be called...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 6 years at
$1,215.08, and currently sell at a price of $1,376.52. What are
their nominal yield to maturity and their nominal yield to call? Do
not round intermediate calculations. Round your answers to two
decimal places.
YTM: %
YTC: %
What return should investors expect to earn on these bonds?
Investors would not expect the bonds to be called...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 6 years at
$1,203.17, and currently sell at a price of $1,355.58. What are
their nominal yield to maturity and their nominal yield to call? Do
not round intermediate calculations. Round your answers to two
decimal places.
YTM: %
YTC: %
What return should investors expect to earn on these bonds?
Investors would expect the bonds to be called and...
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 6 years at
$1,206.61, and currently sell at a price of $1,363.46. What is
their nominal yield to maturity? Do not round intermediate
calculations. Round your answer to two decimal places. What is
their nominal yield to call? Do not round intermediate
calculations. Round your answer to two decimal places.
A firm's bonds have a maturity of 12 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 12 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 6 years at
$1,209, and currently sell at a price of $1,364.88.
What is their nominal yield to maturity? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is their nominal yield to call? Do not round intermediate
calculations. Round your answer to two decimal places.
%
What return should investors expect to...
A firm's bonds have a maturity of 8 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 8 years with a $1,000 face
value, have an 11% semiannual coupon, are callable in 4 years at
$1,146.32, and currently sell at a price of $1,269.54. What are
their nominal yield to maturity and their nominal yield to call? Do
not round intermediate calculations. Round your answers to two
decimal places.
A firm's bonds have a maturity of 10 years with a $1,000 face value, have an...
A firm's bonds have a maturity of 10 years with a $1,000 face
value, have an 8% semiannual coupon, are callable in 5 years at
$1,057.09, and currently sell at a price of $1,108.89. What are
their nominal yield to maturity and their nominal yield to call? Do
not round intermediate calculations. Round your answers to two
decimal places.
YTM: %
YTC: %
What return should investors expect to earn on these bonds?
Investors would not expect the bonds to be called...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You are tasked with assessing the health department’s intervention program in preventing recurrence of acute alcohol...
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
ADVERTISEMENT