Question

Currently, Bruner Inc.'s bonds sell for $1,110. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC? (Subtract the YTC from the YTM.)

Answer #1

Liberty Inc.'s semi-annual bonds currently sell for $1,175. The
annual coupon rate is 12.5%. the bonds have a 15-year maturity, and
a $1,000 par value, but they can be called in 6 years at $1,080.
Assume that no costs other than the premium would be incurred to
call and refund the bonds, also assume the yield curve is
horizontal, with rates expected to remain at current levels on into
the future. What is the difference between this bonds YTM and...

3. Currently, BCA's bonds sell for $1,145. They pay a 8%
semi-annual coupon, have a 14-year maturity, and a $1,000 par
value, but they can be called in 5 years at $1,050. Assume that no
costs other than the call premium would be incurred to call and
refund the bonds, and also assume that the yield curve is
horizontal, with rates expected to remain at current levels on into
the future.
USE FINANCIAL CALCULATOR AND SHOW HOW
3a. What is...

Company Triple A semi-annual bonds currently sell for $1,055.
They have a 5.50% coupon rate and a 25-year maturity and are
callable in 6 years at $1,100.00. Assume that no costs other than
the call premium would be incurred to call and refund the bonds,
and also assume that the yield curve is horizontal, with rates
expected to remain at current levels on into the future. Under
these conditions, what rate of return should an investor expect to
earn if...

Company Triple A semi-annual par value bonds currently sell for
105% of par. They have a 6.50% coupon rate and a 25-year maturity
and are callable in 6 years at an 8% premium. Assume that no costs
other than the call premium would be incurred to call and refund
the bonds, and also assume that the yield curve is horizontal, with
rates expected to remain at current levels on into the future.
Under these conditions, what rate of return should...

Marco Verratti's bonds currently sell for $1,175.89with par
value of $1,000.00. The bonds pay 13.00 percent coupon
rate and have a 17-year maturity, but they can be called in 6 years
at $1,097.00. There are no costs but the call premium and refund
the bonds. In addition, assume that the yield curve is
horizontal, with rates expected to remain at current levels on into
the future. What is the bonds’ yield to maturity? What is the
bonds’ yield to call?

Allied Corp.'s bonds currently sell for $850. They have a 6.35%
semiannual coupon rate and a 10-year maturity, but they can be
called in 5 years at a call price of $1,060.50. Assume that no
costs other than the call premium would be incurred to call and
refund the bonds, and also assume that the yield curve is
horizontal, with rates expected to remain at current levels on into
the future.
a) Calculate the effective yield to maturity.
b) Calculate...

The bonds of ABC Inc are currently selling for $1,250. The
annual coupon payment of these bonds is $90. The bonds have a par
value of $1,000 and a maturity period of 25-years; however, they
are callable in 5 years at the call price of $1,050.Assume that no
additional costs are incurred and that a yield curve is horizontal.
Calculate the difference between the bond's YTM and its
YTC?
Who gets the benefit from callable bonds?

1.) Kay Corporation's 5-year bonds yield 6.30% and
5-year T-bonds yield 4.40%. The real risk-free rate is r* = 2.5%,
the inflation premium for 5-year bonds is IP = 1.50%, the default
risk premium for Kay's bonds is DRP = 1.30% versus zero for
T-bonds, and the maturity risk premium for all bonds is found with
the formula MRP = (t – 1) × 0.1%, where t = number of years to
maturity. What is the liquidity premium (LP) on...

McCue Incis bonds currently sell for $1,100. They pay a $90
annual coupon, have a 25-year maturity, and al $1,000 par value,
but they can be called in 5 years at $1,050. Assume that interest
rates expected te remain at curent levels on into the future. What
is the difference between these bonds' YTMs and YIC
0.99%
1.11%
0.66%
0.77%
0.88%

ABC's Inc.'s bonds currently sell for $1,280 and have a par
value of $1,000. They pay a $135 annual coupon and have a 15-year
maturity, but they can be called in 5 years at $1,050. What is
their yield to call (YTC)?

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