One year ago, you bought the ABC bond with a maturity of 30 years for $980....

One year ago, you bought the ABC bond with a maturity of 30 years for $980. The bond’s capital gains yield is -0.3% as of today. The bond’s coupon rate is 7.0% with semiannual payment of coupon. What is the YTM for the bond as of today?

Solutions

Expert Solution

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

annual coupon payment = 70

Current market price = 980

Current yield of a bond = (annual coupon payment)/(current market price)

=70/980

=7.1429% (answer).

Capital gain Yield+Current Yield = YTM

YTM = -0.3% +7.1429%

YTM = 6.8429%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Three years ago, you bought a 12% bond that had 7 years to maturity and a...

Three years ago, you bought a 12% bond that had 7 years to maturity and a yield to maturity of 12%. Today (after the sixth interest payment), you sold the bond when it is yielding 13%. What is your annual rate of return for the three year period? All coupon payments are semi-annual, and the par value is $1,000.

Three years ago, you bought an 8% coupon bond with a 9-year remaining maturity for $936....

Three years ago, you bought an 8% coupon bond with a 9-year remaining maturity for $936. Today you sold the bond for $1,069. Given that the bond paid coupons semiannually, what was your effective annual rate of return on this investment?

Homer Simpson bought a bond with 20 years to maturity from Doh! a year ago for...

Homer Simpson bought a bond with 20 years to maturity from Doh! a year ago for $1100. This bond has a $1000 par value with a 7.5% coupon rate and makes annual coupon payments. Today, Homer needs money to buy pork rinds and wants to sell the bond, and teh bond's yield to maturity is 6%. What return would Homer earn from sellling the bond today? Solve with using terms in TVM solver (N, I, PV, PMT, FV) a) 6.1%...

Aardvark Enterprise 30 year bonds are currently callable. you bought your bond 5 years ago. if...

Aardvark Enterprise 30 year bonds are currently callable. you bought your bond 5 years ago. if the coupon rate is 5.5% payable semi-annually, the yield to maturity is 8% and the call premium is one year's interest , what is this bond's yield to call?

On the issue date, you bought a 30 year maturity, 5% semiannual coupon bond. The bond...

On the issue date, you bought a 30 year maturity, 5% semiannual coupon bond. The bond then sold at YTM of 6%. Now, seven years later, the similar bond sells at YTM of 4%. If you hold the bond now, what is your realized rate of return for the 7 year holding period?

Two years ago, you bought a 10-year, 6% annual coupon payment bond when its yield-to-maturity was...

Two years ago, you bought a 10-year, 6% annual coupon payment bond when its yield-to-maturity was 8%. Right after you purchased this bond, the yield-to-maturity on this bond increased to 9% and stayed at the same level in the next two years. You reinvested the coupon payments at the market rate of 9%. You just sold the bond at 9% yield-to-maturity. What is your annualized holding period return? What is your capital gain/loss? Note: Remember that capital gains/losses are computed...

Two years ago, you bought a 10-year, 6% annual coupon payment bond when its yield-to-maturity was...

Two years ago, you bought a 10-year, 6% annual coupon payment bond when its yield-to-maturity was 8%. Right after you purchased this bond, the yield-to-maturity on this bond increased to 9% and stayed at the same level in the next two years. You reinvested the coupon payments at the market rate of 9%. You just sold the bond at 9% yield-to-maturity. 1) What is your annualized holding period return? 2) What is your capital gain/loss?

You purchased an annual interest coupon bond one year ago with six years remaining to maturity...

You purchased an annual interest coupon bond one year ago with six years remaining to maturity at the time of purchase. The coupon interest rate is 10% and the par value is $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 7% at the time of sale, your annual total rate of return on holding...

An investor purchased a bond one year ago for $980. He received $17 in interest and sold the bond for $987.

*PLEASE SHOW ALL WORK FOR EVERY QUESTION* QUESTION 1: An investor purchased a bond one year ago for $980. He received $17 in interest and sold the bond for $987. What is the holding-period return on his investment? Note: Express your answer as a percentage with no percentage sign. QUESTION 2: The stock of company XYZ currently trades at $190 and just paid a dividend of $3.8. Suppose that your expectations regarding the stock price and dividends next year are...

Suppose you bought a bond with an annual coupon of 7 percent one year ago for...

Suppose you bought a bond with an annual coupon of 7 percent one year ago for $1,010. The bond sells for $985 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. If the...

Subjects