Question

A 10-year, 12 % semiannual coupon bond with a par value of
$1,000 may be called in 4 years, at a call price of $1,060. The
bond sells for $1,300. (Assume the bond has just been
issued).

a. What is the bond’s yields to maturity? (15 points)

b. What is the bond’s current yield? (15 points)

c. What is the bond’s capital gain or loss yield in the first year
in percent? (15 points)

d. What is the bond’s yield to call? (15 points)

Answer #1

In Excel with formulas--
A 10-year, 12 % semiannual coupon bond with a par value of
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Years to maturity:
20
Periods
per year:
1
Periods
to maturity:
20
Coupon
rate:
8%
Par
value:
$1,000
Periodic
payment:
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price
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price:
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Years
till callable:
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Periods
till callable:
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Last year Carson Industries issued a 10-year, 12% semiannual
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called in 6 years at a price of $1,060 and it sells for $1,300.
What is the bond's nominal yield to maturity? Do not round
intermediate calculations. Round your answer to two decimal places.
% What is the bond's nominal yield to call? Do not round
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% Would an...

BOND YIELDS
Last year Carson Industries issued a 10-year, 12% semiannual
coupon bond at its par value of $1,000. Currently, the bond can be
called in 6 years at a price of $1,060 and it sells for $1,300.
What is the bond's nominal yield to maturity? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is the bond's nominal yield to call? Do not round intermediate
calculations. Round your answer to two decimal places.
%...

Last year Carson Industries issued a 10-year, 12% semiannual
coupon bond at its par value of $1,000. Currently, the bond can be
called in 6 years at a price of $1,060 and it sells for $1,300.
What is the bond's nominal yield to maturity? Do not round
intermediate calculations. Round your answer to two decimal
places.
%
What is the bond's nominal yield to call? Do not round intermediate
calculations. Round your answer to two decimal places.
%
Would an...

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YTC: %
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