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?

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

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?

You own 30-year Treasury Bonds that you bought exactly 6 years ago. At the time (you...

You own 30-year Treasury Bonds that you bought exactly 6 years ago. At the time (you bought the TBonds when they were issued), the 30-year T-Bond yield was 3.75% APR (compounded semiannually). That yield was also the coupon rate used to compute the semi-annual coupon payments (the T-Bonds were issued exactly at par). The T-Bonds have a total face value of $50,000. You just received an interest payment, and the bonds will mature in exactly 24 years. You check today’s...

An 81/2 30-year US corporate bond is callable in 12 years. It is currently sold at...

An 81/2 30-year US corporate bond is callable in 12 years. It is currently sold at a price of $960. The call premium is 10 percent. The prevailing market interest rate at the call date is 8 percent. a. What is the yield to call to an investor who does not reinvest the call price at the prevailing interest rate at the call date? b. What is the yield to call to an investor who reinvests the call price at...

GM issued a $ 1,000, 30-year bond 5 years ago at 9 % interest. Comparable bonds...

GM issued a $ 1,000, 30-year bond 5 years ago at 9 % interest. Comparable bonds yield 6 % today. What should GM’ bond sell for now? Define each variable in the equation P = (D1 + P1) / (1 + R) Solve the NPV and solve for the Payback YR Cash Flow 0 -$26,000 1 11,000 2 14,000 3 11,000 with the required rate equal to 6% 4. Use the following tax brackets for taxable income: Bracket:...

Bond Valuation: A 10-year, 5% semi-annual coupon bond, callable in 5 years for $1,025, currently trades...

Bond Valuation: A 10-year, 5% semi-annual coupon bond, callable in 5 years for $1,025, currently trades for $1,100. (Assume a par value of $1,000). List all inputs you use, and calculate the: a) Yield-to-Maturity b)Yield To Call c)Current Yield d) True or False: As the yield to maturity on a bond rises, its price rises.

Seven Sons Farm issued a 30-year, 7 percent semi-annual bond 5 years ago. The bond currently...

Seven Sons Farm issued a 30-year, 7 percent semi-annual bond 5 years ago. The bond currently sells for 92 percent of its face value. The book value of the debt issue is $21 million. Seven Sons' tax rate is 33 percent. In addition, the company has a second debt issue on the market, a zero coupon bond with 5 years left to maturity; the book value of this issue is $81 million and the bonds sell for 74 percent of...

A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in 5 years at a...

A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in 5 years at a call price of $1100. The bond currently sells at a yield to maturity (YTM) of 7% (3.5% per half-year). What is the yield to call? How does it relate to the YTM? Why?

B. A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in 5 years at...

B. A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in 5 years at a call price of $1100. The bond currently sells at a yield to maturity (YTM) of 7% (3.5% per half-year). What is the yield to call? How does it relate to the YTM? Why?

1. You bought your house 5 years ago, and your original home value when you bought...

1. You bought your house 5 years ago, and your original home value when you bought it was $450,000, you paid 20% down and you financed closing costs equal to 4% of the mortgage amount. The mortgage was a 30-year fixed rate mortgage with a 6.5% annual interest rate. Rates on 30-year mortgages are now at 5% if you pay 2 points upfront. Your refinancing costs will be 2% of the new mortgage amount (excluding points). You won't finance the...

You currently have a £100 million bond portfolio invested 30% in 5-year bonds with a modified...

You currently have a £100 million bond portfolio invested 30% in 5-year bonds with a modified duration of 4.05 years, 25% invested in 10-year bonds with a modified duration of 6.88 years and 45% in 20-year bonds with a modified duration of 10.09 years. The yield curve is currently flat at 8% across all maturities (5-year, 10-year and 20-year.) Calculate the modified duration for your entire bond portfolio. If the entire yield curve suddenly shifts down to yield 7.25%, what...

Subjects