Question

(Related to Checkpoint 9.2) (Yield to maturity) Abner Corporation's bonds mature in 17 years and pay 7 percent interest annually. If you purchase the bonds for $900, what is your yield to maturity? Your yield to maturity on the Abner bonds is nothing%. (Round to two decimal places.)

Answer #1

We know that,

Price of bond = Present value of all coupons and face value discounted at YTM

Face value = 1000

Price = 900

Time for maturity = 17 years

Coupon Amount = 0.07 * 1000 = 70

900 = 70/(1+ytm)^1 +70/(1+ytm)^2 +70/(1+ytm)^3 +70/(1+ytm)^4 + ........... 70/(1+ytm)^17 +1000/(1+ytm)^17

We will use heat and trial method to get that value for which above equation satisfies.

**YTM = 8.10% Answer**

Or

Using Financial Calculator:

N= 17

FV = 1000

PV = -900

PMT = 70

CPT I/Y

**I/Y = YTM = 8.10% Answer**

(Yield to maturity) Abner Corporation's bonds mature in 19
years and pay 14 percent interest annually. If you purchase the
bonds for $750, what is your yield to maturity?
Your yield to maturity on the Abner bonds is ___%. (Round to
two decimal places.)

(Related to Checkpoint 9.2) (Yield to maturity) The
Saleemi Corporation's
$1 comma 0001,000
bonds pay
1111
percent interest annually and have
88
years until maturity. You can purchase the bond for
$1 comma 0651,065.
a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a
comparable-risk bond is
88
percent?
a. The yield to maturity on the Saleemi bonds is _____%.
(Round to two decimal places.)

(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond
valuation) Fingen's
16-year,
$1,000
par value bonds pay
8
percent interest annually. The market price of the bonds is
$900
and the market's required yield to maturity on a
comparable-risk bond is
11
percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?
a. What is your yield to maturity on the Fingen...

(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond
valuation relationships) The 19-year, $1000 par value bonds of
Waco Industries pay 7 percent interest annually. The market price
of the bond is $895, and the market's required yield to maturity
on a comparable-risk bond is 10 percent. a. Compute the bond's
yield to maturity. b. Determine the value of the bond to you given
the market's required yield to maturity on a comparable-risk
bond. c. Should you purchase the bond? a. ...

(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation)
Fingen's 14 -year, $1 comma 000 par value bonds pay 9 percent
interest annually. The market price of the bonds is $1 comma 100
and the market's required yield to maturity on a comparable-risk
bond is 10 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond? a. What is your yield...

(Yield to maturity) The Saleemi Corporation's
$1,000
bonds pay
6
percent interest annually and have
12
years until maturity. You can purchase the bond for
$895.
a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a
comparable-risk bond is 6
percent?
a. The yield to maturity on the Saleemi bonds is
nothing%.
(Round to two decimal places.)

Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond
valuation) Fingen's 14-year, $1 000 par value bonds pay 9
percent interest annually. The market price of the bonds is $1
comma 100 and the market's required yield to maturity on a
comparable-risk bond is 10 percent. a. Compute the bond's yield
to maturity. b. Determine the value of the bond to you, given
your required rate of return. c. Should you purchase the
bond?

(Related to Checkpoint 9.2) (Yield to maturity) The market
price is $750 for a 17-year bond ($1,000 par value) that pays
12 percent annual interest, but makes interest payments on a
semiannual basis (6 percent semiannually). What is the bond's
yield to maturity?

(Yield to maturity) The Saleemi
Corporation's $1,000 bonds pay 11 percent interest annually and
have 12 years until maturity. You can purchase the bond for
$955.
a. What is the yield
to maturity on this bond?
b. Should you
purchase the bond if the yield to maturity on a comparable-risk
bond is 10 percent?
1) The yield to
maturity on the Saleemi bonds is__% (Round to two decimal
places.)
--->You should not OR
should not purchase the bonds because your...

(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond
valuation) The 11-year $1,000 par bonds of Vail Inc. pay 15
percent interest. The market's required yield to maturity on a
comparable-risk bond is 16 percent. The current market price for
the bond is $880.
a. Determine the yield to maturity.
b. What is the value of the bonds to you given the yield to
maturity on a comparable-risk bond?
c. Should you purchase the bond at the current market
price?

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