Question

Mortor’s Corporation sold 6 year bonds for $1072.62, with a face value of $1000 and a...

Mortor’s Corporation sold 6 year bonds for $1072.62, with a face value of $1000 and a coupon rate of 8%. The annual yield to maturity is:

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Yield to maturity is the rate at which investor earns if it holds till maturity.
Yield to maturity = Average Income /Average Investment Where,
= (Coupon+(Par Value-Current Price)/Life)/((Current Price+Par Value)/2) Par Value $ 1,000.00
= (80+(1000-1072.62)/6)/((1072.62+1000)/2) Current Price $ 1,072.62
= 6.55% Period 6
Coupon Interest 80
Thus,
Approximate annual yield to maturity is 6.55%
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
Calculate the bonds yield to maturity below: A $1000 face value, 6 % coupon, twenty year...
Calculate the bonds yield to maturity below: A $1000 face value, 6 % coupon, twenty year bond, callable at $102 in the tenth year, it is trading currently at $98 firts calculate yield to call then yield to maturity write up every step
Face value for bonds is $1000 unless specified otherwise. Compounding is annual unless stated otherwise. 5....
Face value for bonds is $1000 unless specified otherwise. Compounding is annual unless stated otherwise. 5. Ajax is interested in issuing 5-year bonds. Based on the yield curve, 5-year Treasury bonds have a yield of 4%. Ajax has a credit rating of AA. A credit rating of AA requires an additional 1.5% to compensate for default risk. What coupon rate will the bonds have? 6. Use the information below to estimate the price of a 2-year default free security with...
Suppose that Starbucks Corporation (SBUX) issued a two-year bond with a face value of $1000 and...
Suppose that Starbucks Corporation (SBUX) issued a two-year bond with a face value of $1000 and an annual coupon rate of 6%. The yield to maturity on this bond when it was issued was 5%. What was the price of this bond when it was issued? Does this bond trade at a discount, at par, or at a premium? Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon...
your firm has outstanding bonds with semi annual coupon payments and a face value of $1000....
your firm has outstanding bonds with semi annual coupon payments and a face value of $1000. the price today is $1075, the yield yo maturity is 8% and the bonds mature in 15 years. A) compute the annual coupon rate B) compute the capital gains yield C) is the bond a premium or discount? why? D) if the bond price goes up, what will happen to the coupon rate?
The ExecUfind Corporation has issued 20-year semiannual coupon bonds with a face value of $1,000. If...
The ExecUfind Corporation has issued 20-year semiannual coupon bonds with a face value of $1,000. If the annual coupon rate is 10% and the current yield to maturity is 12%, what is the firm's current price per bond? (show all written work)
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity...
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity if the required return on these bonds is 3%? Consider a bond with par value of $1000, 25 years left to maturity, and a coupon rate of 6.4% paid annually. If the yield to maturity on these bonds is 7.5%, what is the current bond price? One year ago, your firm issued 14-year bonds with a coupon rate of 6.9%. The bonds make semiannual...
1) A 2-year maturity bond with face value of $1000 makes annual coupon payments of $80....
1) A 2-year maturity bond with face value of $1000 makes annual coupon payments of $80. At a yield to maturity of 8 percent, the bond must be selling for 2) A 2-year maturity bond with face value of $1000 makes annual coupon payments of 8 percent per annum and is currently selling at par. What return will you earn on the bond if you buy it today and sell it at the end of the year when the yield...
The price of one-year bond (A) with zero coupon and face value $ 1000 is $...
The price of one-year bond (A) with zero coupon and face value $ 1000 is $ 961.5. The price of two-year bond (B) with zero coupon and face value $ 1000 is $ 907. Consider a third bond (C), a two-year bond with $ 100 coupon paid annually and face value of $ 1000. (i) What must be the price of bond C so that the Law of One Price holds. Explain where you use LOOP. (ii) Suppose that the...
The yield-to-maturity (YTM) on one-year bond with zero coupon and face value $ 1000 is 5...
The yield-to-maturity (YTM) on one-year bond with zero coupon and face value $ 1000 is 5 %. The YTM on two-year bond with 5 % coupon paid annually and face value $ 1000 is 6 %. (i) What are the current prices of these bonds? (ii) Find Macaulay durations of these bonds. Consider a third bond which is a zero coupon two-year bond with face value $ 1000. (iii) What must be the price of the third bond so that...
What is the price of a 5​-year, 8.1 % coupon​ rate, $1000 face value bond that...
What is the price of a 5​-year, 8.1 % coupon​ rate, $1000 face value bond that pays interest quarterly if the yield to maturity on similar bonds is 11.5 %​?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT