Question

In: Finance

American Hat has $1,000 face value bonds outstanding with a market price of $1,150.

American Hat has $1,000 face value bonds outstanding with a market price of $1,150. The bonds pay interest semiannually, mature in 8 years, and have a yield to maturity of 5.98 percent. What is the current yield? 


Multiple Choice 

  •  7.28 percent 

  •  6.15 percent 

  •  6.44 percent 

  •  7.06 percent

Solutions

Expert Solution

Calculating Coupon Payment on Bond,

Using TVM Calculation,

PMT = [PV = -1,150, FV = 1,000, N = 16, I = 0.0598/2]

PMT = 41.83

Current Yield = 2(41.83)/1,150

Current Yield = 7.28%

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

LeXnews has 15-year bonds outstanding with a face value of $1,000 and a market price of...
LeXnews has 15-year bonds outstanding with a face value of $1,000 and a market price of $974. The bonds pay interest semi-annually and have a yield to maturity of 4.03 percent. What is the coupon rate? A) 3.80 percent B) 3.15 percent C) 4.15 percent D) 3.60 percent E) 4.10 percent 32) The 6 percent annual coupon bonds of IPO, Inc., are selling for $1,187. The bonds have a face value of $1,000 and mature in 11 years. What is...
Conseco Inc. has the outstanding bonds maturing in 17 years and the bonds have a total face value of $750,000, a face value per bond of $1,000, and a market price of...
1. Conseco Inc. has the outstanding bonds maturing in 17 years and the bonds have a total face value of $750,000, a face value per bond of $1,000, and a market price of $1,011 each. The bonds pay 8 percent interest, semiannually. Also, the firm has 58,000 shares of common stock outstanding at a market price of $36 a share. The common stock just paid a $1.64 annual dividend and has a dividend growth rate of 2.8 percent. There are...
American Steel has issued $50 million in long-term bonds, with a face value of $1,000 paying...
American Steel has issued $50 million in long-term bonds, with a face value of $1,000 paying a 9% coupon. The bonds are now trading at a 15% premium to their face value providing a yield-to-maturity of 7%. The firm also has 1.5 million shares of common stock that were issued at $43/share at the company’s IPO and are currently trading at $56/share. American Steel is a mature firm that paid a $7 dividend last year, and dividends are expected to...
Assume all bonds pay interest semiannually. 2. Calculate the market price of a $1,000 face value...
Assume all bonds pay interest semiannually. 2. Calculate the market price of a $1,000 face value bond under the following conditions.       Coupon Time Until Current        Rate Maturity Discount Rate   a. 12% 15 yrs 10%   b. 7% 5 yrs 12%   c. 9% 25 yrs 6%   d. 14%. 30 yrs 9%   e. 5% 6 yrs. 8% 3. What is the current yield on each of the bonds in the previous problem.
Modern Visionary Hotel Chain has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature...
Modern Visionary Hotel Chain has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in six years, and have a 5 percent coupon. The annual yield to maturity is 12.6%. What is the bonds current price? (round to the nearest penny) N: I: PV: PMT: FV:
Bakes A Lot, Inc., has $1,000 face value bonds outstanding. These bonds pay interest semi-annually, mature...
Bakes A Lot, Inc., has $1,000 face value bonds outstanding. These bonds pay interest semi-annually, mature in 3 years, and have a 8.0 percent coupon. The current price is quoted at 98.59. What is the yield to maturity?
Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity....
Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,170. The bonds may be called in 5 years at 109% of face value (Call price = $1,090). a. What is the yield to maturity? Round your answer to two decimal places. b. What is the yield to call if they are called in 5 years? Round your answer to two decimal...
eBook Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until...
eBook Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 10% annual coupon payment, and their current price is $1,175. The bonds may be called in 5 years at 109% of face value (Call price = $1,090). What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.   % What is the yield to call if they are called in 5 years? Do...
Golden Knight has bonds outstanding with a $1,000 face value and 9 years left until maturity....
Golden Knight has bonds outstanding with a $1,000 face value and 9 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,200. The bonds may be called in 5 years at 109% of face value. The bond’s indenture indicates that the call provision gives the firm the right to call the bonds at the end of each year beginning in Year 5. In Year 5, the bonds may be called at 109% of...
Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity....
Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,170. The bonds may be called in 5 years at 109% of face value (Call price = $1,090). What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.   % What is the yield to call if they are called in 5 years? Do not...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT