Question

Compute the YTC for the FGH Company bond maturing in 10 years (8 percent coupon rate...

Compute the YTC for the FGH Company bond maturing in 10 years (8 percent coupon rate and a face value of $1000) with the call provision of "after 7 at 110" and a market price of 990.

Enter your answer as a percentage without "%", keep two decimal places (e.g., enter 6.375% as 6.38).

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

YTC is calculated using the RATE function in Excel with these inputs :

nper = 7 (7 years until call)

pmt = 8% * 1,000 (8% coupon rate on face value of 1,000 - this is entered as a positive value as it represents cash inflows of coupon payments)

pv = -990 (current market price of bond - this is entered as a negative value as it represents a cash outflow which is the purchase price of the bond)

fv = 110/100*1,000 (call price which is 110 per 100 face value of the bond - this is entered as a positive value as it represents a cash inflow which is the call price receivable on calling the bond)

RATE is calculated to be 9.28%. This is the YTC of the bond

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
Compute the YTC for the FGH Company bond maturing in 12 years (7 percent coupon rate...
Compute the YTC for the FGH Company bond maturing in 12 years (7 percent coupon rate and a face value of $1000) with the call provision of "after 7 at 115" and a market price of 985. Enter your answer as a percentage without %
Compute the Yield to Call (YTC) of a 9% coupon bond, with a $1,000 face value...
Compute the Yield to Call (YTC) of a 9% coupon bond, with a $1,000 face value maturing 20 years from now, but callable in 10 years with a call price of $1,300. Assume the market price of the bond to be $750 and that the coupons are: a)   paid annually. b)   paid semi-annually.
Bond J has a coupon rate of 7 percent and Bond K has a coupon rate...
Bond J has a coupon rate of 7 percent and Bond K has a coupon rate of 13 percent. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 10 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,...
Fooling Company has a callable bond outstanding with a coupon of 11.8 percent, 25 years to...
Fooling Company has a callable bond outstanding with a coupon of 11.8 percent, 25 years to maturity, call protection for the next 10 years, and a call premium of $50. What is the yield to call (YTC) for this bond if the current price is 108 percent of par value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Bond J has a coupon rate of 6 percent and Bond K has a coupon rate...
Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds have 15 years to maturity, make semiannual payments, and have a YTM of 9 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,...
Bond J has a coupon rate of 3 percent and Bond K has a coupon rate...
Bond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent. Both bonds have 17 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,...
5a- Compute the yield to maturity for a zero coupon bond with a maturity of 14...
5a- Compute the yield to maturity for a zero coupon bond with a maturity of 14 years and a face value of $1000. The bond is selling for $519.52. (Assume annual discounting.) (Round to 100th of a percent and enter as a percentage, e.g. 12.34% as 12.34) Answer: 5b- Compute the current yield on a bond with a yield to maturity of 10.3%, a par value of $1000, a coupon rate of 6.0% paid semi-annually, a remaining life of 18...
Greenwich store has a bond that matures in 10 years and has a coupon rate of...
Greenwich store has a bond that matures in 10 years and has a coupon rate of 8 percent. The interest is paid semiannually and the face value is 1000. What is the market price of the bond if the yield to maturity is 7 percent?
Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate...
Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 10.5 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 9.0 percent, how much will Nanotech pay to buy back its current outstanding bonds? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25.)
Nanotech, Inc., has a bond issue maturing in seven years that ispaying a coupon rate...
Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 8.87 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 7.63 percent, how much will Nanotech pay to buy back its current outstanding bonds? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25.)Nanotech will pay $
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT