Question

A callable bond with a $1,000 par value and a 7.5% coupon rate pays interest semiannually. The bond matures in 20 years but is callable in 5 years at a price of $1,100. Today, the bond sells for $1,055.84. What is this bond’s yield to call expressed as a bond equivalent yield?

3.49% |
||

3.90% |
||

6.18% |
||

6.98% |
||

7.80% |

Answer #1

Face(Par) Value = $1000

Semi-annual coupon payment = $1000*7.5%*1/2 = $37.5

No of years to call = 5

n = 5*2 = 10

Price = $1055.84

To calculate the Yield to call(YTC) we eill use Trial and Error method, First we take YTC as 6%

Semi-annual YTC = 6%/2 = 3%

Price = $ 319.88 + $744.09

Price = $ 1063.97

Now, since the price at YTC 6% is higher & closer than the current price, we will take a little higher YTC as 7%

Semi-annual YTC = 7%/2 = 3.5%

Price = $ 311.87 + $708.92

Price = $ 1020.79

Now calculating the YTC,

YTC = 6.18% (approx)

**So, this bond’s yield to call expressed as a bond
equivalent yield is 6.18%**

**hence, Option C**

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...

A bond pays 11% coupon semiannually, has a par value of $1,000
and will mature in 10 years. If it currently sells for $942.65,
what is its yield to maturity?
7.5%
11.6%
12%
8%

q1 - A coupon bond that pays interest semiannually has a par
value of $1,000, matures in 5 years, and has a yield to maturity of
6.5%. If the coupon rate is 3.5%, the intrinsic value of the bond
today will be
Q-2 you purchased s coupon bond at a price of 1059. the coupon
rate for the bond is 5% with a face value of 1000. you sold the
bond at 1066.13 one year later. how much us one...

A $1,000 (par value) bond with a coupon rate of 10%, interest
paid semiannually, matures in ten years and sells for $940.25. What
is the yield to maturity?
A.
11.0%
B.
10.4%
C.
5.2%
D.
5.5%

A.Bond Prices A $1,000 par bond that pays
interest semiannually has a quoted coupon rate of 7%, a promised
yield to maturity of 7.7% and exactly 6 years to maturity. What is
the bond's current value?
B.Bond Prices A $1,000 par bond that pays
interest semiannually has a quoted coupon rate of 5%, a promised
yield to maturity of 5.7% and exactly 11 years to maturity. The
present value of the coupon stream represents ______ of the total
bond's value....

A $1,000 par value bond with 5 years left to maturity pays an
interest payment semiannually with a 8 percent coupon rate and is
priced to have a 5.5 percent yield to maturity. If interest rates
surprisingly change by 0.27 percent, by how much would the bond’s
price change?

a. Consider a coupon bond that pays interest of $60 annually,
has a par value of $1,000, matures in 2 years, and is selling today
at a price of $1000. What is the yield to maturity on this
bond?
b. Consider a zero-coupon bond with a par value of $1,000 that
costs $500 and matures in ten years. What is the yield to maturity
on this bond? Give the formula, and solve.
c. For the bond in part (b) above,...

A 20-year, 8% annual coupon bond
with a par value of $1,000 may be called in 5 years at a call price
of $1,040. The bond sells for $1,100. (Assume that the bond has
just been issued.)
Basic Input Data:
Years to maturity:
20
Periods
per year:
1
Periods
to maturity:
20
Coupon
rate:
8%
Par
value:
$1,000
Periodic
payment:
$80
Current
price
$1,100
Call
price:
$1,040
Years
till callable:
5
Periods
till callable:
5
a. What is the bond's...

A bond has a $1,000 par value, 19 years to maturity, and pays a
coupon of 5.75% per year, semiannually. The bond can be called in
four years at $1,085. If the bond’s current yield is 5.54% per
year, what is its yield to call?
Question 10 options:
A)
6.82%
B)
6.76%
C)
6.61%
D)
6.91%
E)
6.56%

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

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 25 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago