Question

Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a...

Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a par value of $1,000. The bonds are currently selling at a premium price of $1,150 in the bond market. What is their yield to maturity (YTM)? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Given about Niendorf Corporation's bond,

year to maturity = 25 years

coupon rate = 8.75% paid semiannually

Face value = $1000

Semiannual coupon payment = (8.75%/2) of 1000 = $43.75

current price of the bond = $1150

So, Yield to maturity of the bond can be calculated on financial calculator using following values:

FV = 1000

PV = -1150

N = 2*25 = 50

PMT = 43.75

Compute for I/Y, we get I/Y = 3.71

So, semiannual yield = 3.71%

So, Yield to maturity of the bond = 2*3.71 = 7.42%

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a...
Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a par value of $1,000. The bonds are currently selling at a premium price of $1,100 in the bond market. What is their yield to maturity (YTM)?
A 10-year, $1,000 par value bond has a 6.25% coupon rate with interest paid semiannually. The...
A 10-year, $1,000 par value bond has a 6.25% coupon rate with interest paid semiannually. The bond currently sells for $825. What is the capital gains yield on these bonds? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.
A 10-year, $1,000 par value bond has a 6.75% coupon rate with interest paid semiannually. The...
A 10-year, $1,000 par value bond has a 6.75% coupon rate with interest paid semiannually. The bond currently sells for $825. What is the capital gains yield on these bonds? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.
ABC Enterprises’ bonds currently sell for $1,100. They have a 5-year maturity, an 8% coupon rate...
ABC Enterprises’ bonds currently sell for $1,100. They have a 5-year maturity, an 8% coupon rate with interest paid semi–annually, and a par value of $1,000. What is their current yield? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.
Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% coupon paid semiannually,...
Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% coupon paid semiannually, and a $1,000 par value. The bond has a 6.75% nominal yield to maturity, but it can be called in 4 years at a price of $1,085. What is the bond’s nominal yield to call? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35...
Big Manufacturer Corporation's bonds have a 10-year maturity, a 5.75% coupon rate with interest paid semiannually,...
Big Manufacturer Corporation's bonds have a 10-year maturity, a 5.75% coupon rate with interest paid semiannually, and a par value of $1,000. The nominal required rate of return on these bonds is 7.25%. What is the bond’s intrinsic value? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.
Big Manufacturer Corporation's bonds have a 10-year maturity, a 5.75% coupon rate with interest paid semiannually,...
Big Manufacturer Corporation's bonds have a 10-year maturity, a 5.75% coupon rate with interest paid semiannually, and a par value of $1,000. The nominal required rate of return on these bonds is 7.50%. What is the bond’s intrinsic value? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.
Big Manufacturer Corporation's bonds have a 10-year maturity, a 5.75% coupon rate with interest paid semiannually,...
Big Manufacturer Corporation's bonds have a 10-year maturity, a 5.75% coupon rate with interest paid semiannually, and a par value of $1,000. The nominal required rate of return on these bonds is 6.75%. What is the bond’s intrinsic value? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000...
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,195. What is the bond's nominal yield to call? Select the correct answer. a. 7.32% b. 7.16% c. 7.64% d. 7.48%
Mercy Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000...
Mercy Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's nominal yield to call? please show all work
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT