Pedrollo Pumps has issued a bond which has a $1,000 par value and a 15 percent annual coupon interest rate.

Pedrollo Pumps has issued a bond which has a $1,000 par value and a 15 percent annual coupon interest rate. The bond will mature in twenty years and currently sells for $1,250.
Required:
a) Using the approximation formula, calculate the yield to maturity (YTM)
b) Calculate the current yield of Pedrollo bonds.

Solutions

Expert Solution

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

A $1,000 par value bond has a coupon interest rate of 6 percent. The interest payment...

A $1,000 par value bond has a coupon interest rate of 6 percent. The interest payment is ? a. $160 b. $6 c. need to know the maturity date d. $60

Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate...

Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate of 8% and having 15 years until maturity if the required return on similar-risk bonds is currently a 16% annual rate paid quarterly.

A bond with a par value of $1,000 has a 6% coupon rate with semi-annual coupon...

A bond with a par value of $1,000 has a 6% coupon rate with semi-annual coupon payments made on July 1 and January 1. If the bond changes hands on November 1, which of the following is true with respect to accrued interest? The buyer will pay the seller $20 of accrued interest The seller will pay the buyer $20 of accrued interest The buyer will pay the seller $10 of accrued interest The seller will pay the buyer $10...

A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate....

A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,040. Further assume Ms. Bright paid 20 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...

A $1,000 par value bond was issued 30 years ago at a 12 percent coupon rate....

A $1,000 par value bond was issued 30 years ago at a 12 percent coupon rate. It currently has 25 years remaining to maturity. Interest rates on similar obligations are now 8 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,090. Further assume Ms. Bright paid 40 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...

Madison Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest...

Madison Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 11%, and the company is certain it will remain at 11% until the bond matures in 15 years. Assuming that the required return does remain at 14% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, and (6) 1 year to maturity. Plot your...

Pecos Manufacturing has just issued a 15-year, 11% coupon interest rate, 1,000-par bond that pays interest...

Pecos Manufacturing has just issued a 15-year, 11% coupon interest rate, 1,000-par bond that pays interest annually. The required return is currently 18%, and the company is certain it will remain at 18% until the bond matures in 15 years. a. Assuming that the required return does remain at 18% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. .

A coupon bond which pays interest semi-annually, has a par value of $1,000, matures in 15...

A coupon bond which pays interest semi-annually, has a par value of $1,000, matures in 15 years, and has a yield to maturity of 4.2%. If the coupon rate is 3.7%, the market price of the bond today will be

A bond has a $1,000 par value, 15 years to maturity, and an 8% annual coupon...

A bond has a $1,000 par value, 15 years to maturity, and an 8% annual coupon and sells for $1,080. What is its yield to maturity (YTM)? Round your answer to two decimal places. % Assume that the yield to maturity remains constant for the next three years. What will the price be 3 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. $

Consider an annual-pay bond with a $1,000 par value and a 7 percent coupon rate, three...

Consider an annual-pay bond with a $1,000 par value and a 7 percent coupon rate, three years remaining to maturity, and a 9 percent yield to maturity. The duration of this bond is closest to: Group of answer choices 2.8 years 2.63 years 2.5 years

Subjects