Question

A bond with 6 years remaining until maturity is currently trading for 102 per 100 of par value. The bond offers an 8% coupon rate with interest paid semiannually. The bond is first callable in 2 years, and is callable after that date on coupon dates according to the following schedule.

End of Year

4

5

6

Call price

103

102

100

A. What is the bonds YTM?

B. The bond's annual yield-to-first call is closest to?

C. What is the bond's yield to second call?

D. What is the bond's yield to worst?

Answer #1

A. Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. Yield to maturity is considered a long-term bond yield but is expressed as an annual rate.

The YTM of a discount bond that does not pay a coupon is a good starting place in order to understand some of the more complex issues with coupon bonds. The formula to calculate YTM of a discount bond is as follows:

YTM=(Face Value/Current Price)1/n−1

(100/102)1/12 -1Answer

(b)

1. A 4% coupon bond with 6 months remaining until maturity is
currently trading at $997.78. Assume semi-annual coupon payments.
The bond's YTM is__________%. Do not round any intermediate work.
Round your *final* answer to 2 decimal places (example: .1234567 =
12.35). Do not enter the % sign.
2. A bond with 9 years left to maturity is trading for $1010. It
pays coupons semiannually. Its YTM is currently 3.6%. The coupon
rate for this bond must be ________%.
Do...

Delta Corporation has a bond issue outstanding with 25 years
remaining until maturity. The bond has a coupon rate of 4.5
percent, paid semiannually. The bonds are currently selling for
$992.80 and are callable in two years with a call premium of 2
percent.
a. What is the yield to maturity?
b. What is the yield to call?

A 4% coupon bond with 6 months remaining until maturity is
currently trading at $1000.27. Assume semi-annual coupon payments.
The bond's YTM is__________%. Do not round any intermediate work.
Round your *final* answer to 2 decimal places (example: .1234567 =
12.35). Do not enter the % sign. Margin of error for correct
responses: +/- .03%.

A 6% annual coupon bond has 11 years remaining until maturity.
Par value is $1000.
The required rate of return (yield to maturity)on the bond is
8.5%.
Compute the price of the bond today using the appropriate Excel
formula
Compute the price of the same bond if it has 10 years remaining
to maturity instead of 11.
What is the capital gains yield on the bond?
What is the current yield on the bond?
What is the total yield on...

Quantitative Problem: Ace Products has a bond
issue outstanding with 15 years remaining to maturity, a coupon
rate of 7% with semiannual payments of $35, and a par value of
$1,000. The price of each bond in the issue is $1,190.00. The bond
issue is callable in 5 years at a call price of $1,070.
What is the bond's current yield? Round your answer to two decimal
places. Do not round intermediate calculations.
%
What is the bond's nominal annual...

Ace Products has a bond issue outstanding with 15 years
remaining to maturity, a coupon rate of 7.6% with semiannual
payments of $38, and a par value of $1,000. The price of each bond
in the issue is $1,220.00. The bond issue is callable in 5 years at
a call price of $1,076.
What is the bond's current yield? Round your answer to two
decimal places. Do not round intermediate calculations.
% What is the bond's nominal annual yield to...

Quantitative Problem: Ace Products has a bond
issue outstanding with 15 years remaining to maturity, a coupon
rate of 8.2% with semiannual payments of $41, and a par value of
$1,000. The price of each bond in the issue is $1,260.00. The bond
issue is callable in 5 years at a call price of $1,082.
What is the bond's current yield? Do not round intermediate
calculations. Round your answer to two decimal places.
%
What is the bond's nominal annual...

Quantitative Problem: Ace Products has a bond
issue outstanding with 15 years remaining to maturity, a coupon
rate of 7.2% with semiannual payments of $36, and a par value of
$1,000. The price of each bond in the issue is $1,170.00. The bond
issue is callable in 5 years at a call price of $1,072.
1.What is the bond's current yield? Do not round intermediate
calculations. Round your answer to two decimal places.
%
2.What is the bond's nominal annual...

Question 1
a. A bond that pays interest semiannually is selling for 100% of
its $1,000 par value. The bond has a 4% coupon rate and paid a
coupon 1 month ago. What is this bond's invoice price?
b.A bond has a $1,000 par value,10 years to maturity, a 4.5%
coupon, and currently sells for $1,037. The bond pays coupons
semiannually. The bond is callable 3 years from today with a call
price of $1,020. What is this bond's yield...

Zero-coupon bond. Wesley Company will issue a zero-coupon bond
LOADING... this coming month. The projected bond yield LOADING...
is 6%. If the par value LOADING... is $5,000, what is the bond's
price using a semiannual convention if
a. the maturity LOADING... is 10 years?
b. the maturity is 40 years?
c. the maturity is 60 years?
d. the maturity is 100 years?
Part B
Callable bond. Corso Books has just sold a callable bond. It is
a thirty-year monthly bond...

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