16. A $1,000 par value bond sells for $1,216. It matures in 20years, has a...

A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 48 percent coupon, pays interest semiannually, and can be called in 5 years at a price of $1197. What is the bond's Yield -to-Call?

Expert Solution

Yield to call means return that stockholder receives if the bond is held upto the date of call. Thus, if the call date is before maturity yield to call calculates till call date only.

Yield to call = [ Coupen Amount + { (Maturity value - Price) / N } ] / [ (Price + Maturity value) / 2 ]

= [ 1000 * 4.8% + { (1197 - 1216 ) / 5 } ] / [ ( 1216 + 1197 ) / 2 ]

= [ 48 - 3.8 ] / 1206.50

= 3.66% Answer

jeff jeffy answered 2 years ago

Calculate the value of a bond that matures in 16 years and has a $1,000 par...

Calculate the value of a bond that matures in 16 years and has a $1,000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent.

A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 48...

A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 48 percent coupon, pays interest semiannually, and can be called in 5 years at a price of $1197. What is the bond's Yield -to-Call?

Calculate the value of a bond that matures in 15 years and has a $1,000 par...

Calculate the value of a bond that matures in 15 years and has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required yield to maturity on a comparable-risk bond is 11 percent.

Calculate the value of a bond that matures in 18 years and has a $1,000 par...

Calculate the value of a bond that matures in 18 years and has a $1,000 par value. The annual coupon interest rate is 13 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent.

(Bond valuation) A bond that matures in 8 years has a $1,000 par value. The annual...

(Bond valuation) A bond that matures in 8 years has a $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 18 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? *Someone previously answered this with annually = $604.56 and semiannually = $596.89 and the annual number is incorrect*

(Bond valuation) A bond that matures in 11 years has a $1,000 par value. The annual...

(Bond valuation) A bond that matures in 11 years has a $1,000 par value. The annual coupon interest rate is 8 percent and the market's required yield to maturity on a comparable-risk bond is 13 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a.The value of this bond if it paid interest annually would be $

A $1,000 par value bond has a current price of $891.04 and a maturity value of $1,000 and matures in 7

A $1,000 par value bond has a current price of $891.04 and a maturity value of $1,000 and matures in 7 years. If interest is paid semiannually and the bond is priced to yield 8%, what is the bond's annual coupon rate?The bond's annual coupon rate is _%?

Mayfawny owns an 8 year bond with a par value of 1,000. The bond matures for...

Mayfawny owns an 8 year bond with a par value of 1,000. The bond matures for par and pays semi-annual coupons at a rate of 6% convertible semi-annually. Calculate the Modified duration of this bond at an annual effective interest rate of 9.2025%.

A bond that matures in 16 years has a $1000 par value. The annual coupon interest...

A bond that matures in 16 years has a $1000 par value. The annual coupon interest rate is 13 percent and the market's required yield to maturity on a comparable-risk bond is 18 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?

A bond that matures in 13 years has a $1,000 par value. The annual coupon interest...

A bond that matures in 13 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 17 percent. a. What would be the value of this bond if it paid interest annually? b. What would be the value of this bond if it paid interest semiannually?

Question