Question

Suppose that a 9% semi-annual coupon bond with a time to maturity of 10 years and a par value of $100 has a price of $107,5. This bond is first callable in 7 years at a redemption price of $105,5. What is the yield to maturity for this bond? What is the yield to first call for this bond?

Answer #1

Suppose that a 9% semi-annual coupon bond with a time to
maturity of 10 years and a par value of $100 has a price of $107,5.
This bond is first callable in 7 years at a redemption price of
$105,5.
What is the yield to maturity for this bond?
What is the yield to first call for this bond? You will need to
use Excel for this problem

Bond 1
Coupon rate
6%
Annual coupon frequency
2
Par
$1,000
Time to maturity (years)
10
2. (10 points) Compute the following yields:
a) the yield to maturity for
Bond 1, above, if the current bond price is
$875.
b) the yield to call for Bond 1 if its
current price is $1050 and it is callable in 4 years at a value of
par plus one year’s coupon interest.

An 8% coupon bond, $1,000 par value, annual payments, 10 years
to maturity is callable in 7 years at a call price of $1,200. If
the bond is selling today for $900, the yield to call is closest
to

ABC
Co. bonds have a term to maturity of 15 years, callable, 8%
semi-annual coupon bonds at their par value of $1000. the bond is
selling for $925 today. the call price is $1080. if the bond is
expected to be called in 5 years, how much is the yield to
call?

PART 2 - BOND CALCULATIONS
a) What is the price of a $1,000 par value, semi-annual coupon
bond with 16 years to maturity, a coupon rate of 5.40% and a
yield-to-maturity of 5.90%?
b) What is the price of a $1,000 par value, 10 year, annual
coupon bond with a 5.80% coupon rate and a yield to maturity of
5.50%
c) A 10-year, 6.30% semi-annual coupon bond today and the
current market rate of return is 5.60%. The bond is...

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...

3) A bond currently sells for $850. It has an
eight-year maturity, an annual coupon of $80 but paid
semi-annually, and a par value of $1,000. This bond has a
callable feature. If this bond can be called after 5 years, for
$1,025.
(1) What is its annual yield to maturity?
(2) What is its current yield?
(3) What is the bond’s nominal yield to call (YTC)?
(4) If you bought this bond, would you be more
likely to earn the YTM...

Boeing Corporation has just issued a callable (at par)
three-year, 4.9 % coupon bond with semi-annual coupon payments.
The bond can be called at par in two years or anytime thereafter on
a coupon payment date. It has a price of $ 98.56
a. What is the bond's yield to maturity?
b. What is its yield to call?
c. What is its yield to worst?

Austin Corp. issued a non-callable bond that has 14 years to
maturity, an 8% semi-annual coupon, and a $1,000 par value. your
required return on the Austin Corp. Bond is 9%, if you buy it, you
plan to hold it for 9 years. You (and the market) have expectations
that in 9 years, the yield to maturity on a 5-year bond with
similar risk will be 9.5%. How much should you be willing to pay
for the Austin Corp. Bond...

1.A 12-year bond has a 9 percent annual coupon, a yield to
maturity of
11.4 percent, and a face value of $1,000. What is the price of the
bond?
2.You just purchased a $1,000 par value, 9-year, 7 percent
annual coupon bond that pays interest on a semiannual basis. The
bond sells for $920. What is the bond’s nominal yield to
maturity?
a. 7.28%
b. 8.28%
c. 9.60%
d. 8.67%
e. 4.13%
f. None of
the above
3.A bond with...

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