Question

In: Finance

YIELD TO MATURITY A firm's bonds have a maturity of 10 years with a $1,000 face...

YIELD TO MATURITY

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 $1,052, and currently sell at a price of $1,099.77.

  1. What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

    %
  2. What is their nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.

    %

Solutions

Expert Solution

a

                  K = Nx2
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2
                   k=1
                  K =10x2
1099.77 =∑ [(8*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^10x2
                   k=1
YTM% = 6.62
b
                  K = Time to callx2
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTC/2)^k]     +   Call Price/(1 + YTC/2)^Time to callx2
                   k=1
                  K =5x2
1099.77 =∑ [(8*1000/200)/(1 + YTC/200)^k]     +   1052/(1 + YTC/200)^5x2
                   k=1
YTC% = 6.53

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

YIELD TO MATURITY-4 A firm's bonds have a maturity of 10 years with a $1,000 face...
YIELD TO MATURITY-4 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 $1,048, and currently sell at a price of $1,092.12. 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...
Yield to maturity A firm's bonds have a maturity of 8 years with a $1,000 face...
Yield to maturity A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 4 years at $1,050, and currently sell at a price of $1,096.35. What is their nominal yield to maturity? Round your answer to two decimal places. % What is their nominal yield to call? Round your answer to two decimal places. % What return should investors expect to earn on these bonds? Investors would expect...
YIELD TO MATURITY A firm's bonds have a maturity of 8 years with a $1,000 face...
YIELD TO MATURITY 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 $1,152, and currently sell at a price of $1,278.74. 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...
YIELD TO MATURITY A firm's bonds have a maturity of 8 years with a $1,000 face...
YIELD TO MATURITY 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 $1,144, and currently sell at a price of $1,265.82. 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...
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...
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 $1,061, and currently sell at a price of $1,115.28. 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. % What return should investors expect to...
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 11% semiannual coupon, are callable in 5 years at $1,181.54, and currently sell at a price of $1,325.03. 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 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 11% semiannual coupon, are callable in 5 years at $1,184, and currently sell at a price of $1,332.41. What is their nominal yield to maturity? Round your answer to two decimal places. What is their nominal yield to call? Round your answer 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 $1,048.55, and currently sell at a price of $1,094.26. 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...
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 11% semiannual coupon, are callable in 5 years at $1,178.52, and currently sell at a price of $1,321.72. 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...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT