Define yield to maturity, coupon, time to maturity yield to call please answer in essay form

Define yield to maturity, coupon, time to maturity yield to call

please answer in essay form

Expert Solution

Yield to maturity : It is total return anticipated on bond if the bond is held till maturity. It is expressed as an annual rate. It can be found using following formula

YTM = Interest +([Face value - selling price of bond]/2) / [Face value + selling price of bond]/Number of year till maturity

In other words it is internal rate of return of an investment in a bond if the investor holds it until maturity , assuming that all the payment are re invested at same rate

Coupon rate : It is rate at which bond holder gets interest payment. Say coupon rate is 10% and face value is 1000$ than bond holder will get 100$ as interest (1000*10%)

Time to maturity : The period till which bond will not get redeemed. if Time to maturity of bond is 6 years than bond will get redeemed after 6 years onle

Yield to call: Sometimes bond issuer includes a call option on bond to protect themself from unfavourable movement in interest rate. For example in interest in market drops substantially than the issuer will stuck with high interest payment. in that case it can call back the bond.

YTC can be calculated as under

Interest +([Face value - call price of bond]/2) / [Face value + call price of bond]/Number of year

jeff jeffy answered 1 year ago

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

In 350 words, discuss the importance of Yield to Maturity and Yield to Call and incorporate...

In 350 words, discuss the importance of Yield to Maturity and Yield to Call and incorporate real examples where applicable.

The yield to maturity on 1-year zero-coupon bonds is currently 6.5%; the yield to maturity on...

The yield to maturity on 1-year zero-coupon bonds is currently 6.5%; the yield to maturity on 2-year zeros is 7.5%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon of 8.5%. The face value of the bond is $1,000. At what price will the bond sell? What will the yield to maturity on the bond be? If the expectations theory of the yield curve is correct, what is the market expectation...

Please answer the following questions ? Your answer should be in an essay form with examples...

Please answer the following questions ? Your answer should be in an essay form with examples as well...PLEASE TRY TO EXPLAIN AS MUCH AS U CAN,OTHERWISE LET OTHERS TRY 1- Compare and contrast the two metaphors of change as proposed by Lewin? Provide examples in your explaination... 2- "Proper selection is a substitute for socialization." Do you agree or disagree with this statement? Explain your answer in an essay???

please give me the answer within 1hour 1.For the same time-to-maturity, a lower coupon bond has...

please give me the answer within 1hour 1.For the same time-to-maturity, a lower coupon bond has a greater percentage price change than a higher-coupon bond when their market discount rates change by the same amount. Explain with examples 2. When the real interest rate is low,there are greater incentives to borrow and fewer incentives to lend.justify your answer with examples

Current yield and yield to maturity An annual coupon bond has a $1,000 face value, coupon...

Current yield and yield to maturity An annual coupon bond has a $1,000 face value, coupon rate of 5%, will mature in 10 years, and currently sells for $810.34. a. What is the yield to maturity of the bond? b. What is the current yield of the bond? c. Why does the current yield differ from the yield to maturity? d. One year later, the market rates have increased to 8%. Assume that you have just received a coupon payment...

Yield to maturity. What is the yield of each of the followingbonds,, if interest (coupon)...

Yield to maturity. What is the yield of each of the following bonds,, if interest (coupon) is paid semiannually?a. What is the yield of the following bond if interest (coupon) is paid semiannually?(Round to two decimal places.)Par ValueCoupon RateYears to MaturityYield to MaturityPrice$5,000.0011%30?$6,030.00$5,000.008%5?$5,000.00$1,000.0012%5?$1,200.00$1,000.006%20?$590.00

Yield to maturity. What is the yield of each of the following bonds, if interest (coupon)...

Yield to maturity. What is the yield of each of the following bonds, if interest (coupon) is paid annually? a. What is the yield of the following bond if interest (coupon) is paid annually? (Round to two decimal places.) Data Table Par Value Coupon Rate Years to Maturity Yield to Maturity Price $1,000.00 10% 30 ? $900.00 $5,000.00 6% 10 ? $5,300.00 $5,000.00 8% 10 ? $5,730.00 $1,000.00 7% 5 ? $800.00

Yield to maturity. What is the yield of each of the following bonds if interest (coupon)...

Yield to maturity. What is the yield of each of the following bonds if interest (coupon) is paid semiannually? (Round to two decimal places.) Par Value Coupon Rate Years to Maturity Yield to Maturity Price $1,000.00 12% 15 ?______ $1,000.00 $5,000.00 11% 10 ?______ $6,010.00 $5,000.00 8% 25 ?______ $7,120.00 $1,000.00 7% 30 ?______ $700.00

what is the yield to call of a bond that has a coupon rate of a...

what is the yield to call of a bond that has a coupon rate of a 10.25% payable semiannually, a yield to maturity of 9.75%. The bond has 12 years to maturity, 3 years to call and the call premium is two year's interest?

Question