Question

type | issue date | price (per $100 par value) | Coupon Rate | Maturity Date | Yield to maturity | Current Yield | Rating |

Bond | aug 2005 | 79.56 | 4.50% | 8-15-2015 | - | 5.66% | AAA |

Treasury notes and bonds. Use the information in the following table: Assume a $100,000 par value. What is the yield to maturity of the August 2005 Treasury bond with semiannual payment? Compare the yield to maturity and the current yield. How do you explain this relationship?

What is the yield to maturity of the August 2005 Treasury bond?

Compare the yield to maturity and the current yield. How do you explain this relationship? (Select the best response.)

A. If a bond sells at a discount, the yield to maturity is greater than the current yield.

B. If a bond sells at a premium, the yield to maturity is greater than the current yield.

C. If a bond sells for its par value, the yield to maturity is greater than the current yield.

D. There is no certain relationship between the yield to maturity and the current yield.

Answer #1

YTM is calculated using RATE function in Excel with these inputs :

nper = 10*2 (10 years to maturity with 2 semiannual coupon payments each year)

pmt = 100000 * 4.5% / 2 (semiannual coupon payment = face value * annual coupon rate / 2. This is a positive figure as it is an inflow to the bondholder)

pv = -100000 * 79.56 / 100 (current bond price = face value * 104 / 100. This is a negative figure as it is an outflow to the buyer of the bond)

fv = 100000 (face value of the bond receivable on maturity. This is a positive figure as it is an inflow to the bondholder)

The RATE calculated is the semiannual YTM. To calculate the annual YTM, we multiply by 2. Annual YTM is 7.43%

yield to maturity of the August 2005 Treasurybond is 7.43%

A. If a bond sells at a discount, the yield to maturity is greater than the current yield.

Today is February 15, 2008
Type
Issue
Date
Price (per $100 par value)
Coupon
Rate
Maturity
Date
YTM
Current
Yield
Rating
Bond
Aug 2002
92.28
3.50%
8-15-2012
–
3.793%
AAA
Treasury notes and bonds. Use the information in the following
table: Assume a $100,000 par value. What is the yield to maturity
of the August 2002 Treasury bond with semiannual payment? Compare
the yield to maturity and the current yield. How do you explain
this relationship?
What is the yield...

Treasury notes and bonds. Use the information in the following
table: Assume a $100,000 par value. What is the yield to maturity
of the August 2005 Treasury bond with semiannual payment? Compare
the yield to maturity and the current yield. How do you explain
this relationship?
Today is February 15, 2008
Type
Issue
Date
Price (per $100 par value)
Coupon
Rate
Maturity
Date
YTM
Current
Yield
Rating
Bond
Aug 2005
85.15
5.00%
8-15-2015
–
5.872%
AAA
What is the yield...

A)
Today is February 15, 2008
Type. Issue Date. Price. Coupon Rate.
Maturity Date. YTM. Current
Yield. Rating.
Note Feb 2003. ? 6.75% 2-15-2013. 5.532%. ------- AAA
What is the price in dollars of the February 2003 Treasury note
with semiannual payment if its par value is $100,000? What is the
current yield of this note?
B)
Today is February 15, 2008
Type.
Issue. Date.
Price (per $100 par value)
Coupon
Rate.
Maturity
Date.
YTM.
Current
Yield....

Assume a $100,000 par value.
a) What is the yield to maturity of the August 2005 Treasury
bond with a semi annual payment?
b) Compare the yield to maturity and the current yield. How do
you explain this relationship?
Today is Feb 15th, 2008.
Type
Issue
Date
Price (per $100 par value)
Coupon
Rate
Maturity
Date
YTM
Current
Yield
Rating
Bond
Aug 2005
89.63
4.75%
8-15-2015
–
5.300%
AAA

Par value
Coupon interest rate
Years to maturity
Current value
$500
8%
20
$320
Yield to maturity The bond shown in the following table pays
interest annually
a. Calculate the yield to maturity (YTM) for the bond. b.
What relationship exists between the coupon interest rate and yield
to maturity and the par value and market value of a bond?
Explain.

Treasury notes and bonds. Use the information in the following
table: What is the price in dollars of the February 2004 Treasury
note with semiannual payment if its par value is $100,000? What
is the current yield of this note?
What is the price in dollars of the February 2004 Treasury
note? (Round to the nearest cent)
Data Table
Today is February 15, 2008
Type
Issue Date
Price
Coupon Rate
Maturity Date
YTM
Current Yield
Rating
Note
Feb 2004
–...

What is the price in dollars of the February 2003 treasury note
with semiannual payment if its par value is $100,000? What is the
current yield of this note?
Type Issue Date Price Coupon
Rate Maturity Date YTM Current
Yield Rating
Note Feb 2003 - 6.00% 2-15-2013 5.725% -
AAA

Treasury notes and bonds. Use the information in the following
table: What is the price in dollars of the February 2000 Treasury
note with semiannual payment if its par value is $100,000?What is
the current yield of this note?
Today is February 15, 2008
Type
Issue
Date
Price
Coupon
Rate
Maturity
Date
YTM
Current
Yield
Rating
Note
Feb 2000
–
7.50%
2-15-2010
4.599%
–
AAA
What is the price in dollars of the February 2000 Treasury
note?
________% (Round to...

Yield to maturity
The Salem Company bond currently sells for $507.30, has a
coupon interest rate of 6% and a $1000 par value, pays interest
annually, and has 11 years to maturity.
a. Calculate the yield to maturity on this bond.
b. Explain the relationship that exists between the coupon
interest rate and yield to maturity and the par value and market
value of a bond.

Par Value
1,000
Settlement date
1/1/2000
Maturity date
1/1/2015
Annual coupon rate
7.00%
Coupons per year
2
Yield to maturity
7%

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