Question

Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.375 percent. If these bonds have a market price of $982.63, what yield to maturity and effective annual yield can she expect to earn? (Round answer to 2 decimal places, e.g. 15.25%.) Yield to maturity % Effective annual yield %

Answer #1

In this question, we need to calculate the YTM of the bond. Exact YTM calculation requires use of Excel ro Financial calculator. For manual calculation, we can only calculate approx YTM.

For our question, C = 5.375% * $1000/2 = $26.875 (semi-annual), F = $1000, P = $982.63, n = 3 year --> 6 semi-annual periods

Approx YTM = 29.77/991.315 = **3.00%** -->
Semi-annual

Annual YTM = 3% * 2 = **6%** -->
Annual YTM

Effective Annual Yield = (1 + 3%)^{2} - 1 = **6.09%** -->
Effective Annual Yield

Excel calculation:

Ruth Hornsby is looking to invest in a three-year bond that
makes semiannual coupon payments at a rate of 17.32 percent. If
these bonds have a market price of $980.57, what yield to maturity
and effective annual yield can she expect to earn?
(Round answer to 2 decimal places, e.g.
15.25%.)
Yield to maturity
%
Effective annual yield
%

Ruth Hornsby is looking to invest in a three-year bond that
makes semiannual coupon payments at a rate of 13.72 percent. If
these bonds have a market price of $985.45, what yield to maturity
and effective annual yield can she expect to earn?

Mary Smith is looking to invest in a three-year bond that makes
semi-annual coupon payments at a rate of 5.225 percent. If these
bonds have a market price of $970.00, what yield to maturity can
she expect to earn? (Round intermediate calculations to
5 decimal places, e.g. 1.25145 and final answer to 2 decimal
places, e.g. 15.25%.)

Susan Wilson is looking to invest in a three-year bond that
makes semi-annual coupon payments at a rate of 5.875 percent. If
these bonds have a market price of $987.65, what yield to maturity
can she expect to earn? (Round intermediate
calculations to 5 decimal places, e.g. 1.25145 and final answer to
2 decimal places, e.g. 15.25%.)

Problem 8.09 (Excel Video) Karen White is looking to invest in a
three-year bond that makes semi-annual coupon payments at a rate of
5.275 percent. If these bonds have a market price of $987.74, what
yield to maturity can she expect to earn

A 25-year maturity bond with par value $1,000 makes semiannual
coupon payments at a coupon rate of 8%.
a. Find the bond equivalent and effective
annual yield to maturity of the bond if the bond price is $950.
(Round your intermediate calculations to 4 decimal places.
Round your answers to 2 decimal places.)
Bond equivalent yield to maturity
%
Effective annual yield to maturity
%

Please answer the 8 questions. Thank you!
1. Cullumber, Inc., has issued a three-year bond that pays a
coupon rate of 9.4 percent. Coupon payments are made semiannually.
Given the market rate of interest of 4.0 percent, what is the
market value of the bond? Round answer to 2 decimal places
2. Ten-year zero coupon bonds issued by the U.S. Treasury have a
face value of $1,000 and interest is compounded semiannually. If
similar bonds in the market yield 11.6...

You are thinking of purchasinga bond with a coupon rate of 6.0%
and makes semiannual payments. The yield to maturity is 6.3% and
the bond matures in 21 years. What is the market price if the bond
has a par value of $1,000? AND Do you expect the
price of the bond to Increase OR decrease over the next year?

A corporation has a bond outstanding that makes semiannual
coupon interest payments. The coupon rate for the bond is 3.2
percent, the YTM (yield to maturity) is 4.5 percent, the par value
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remain unchanged, what will the price of the bond be in 3
years?

A 30-year maturity bond with face value of $1,000 makes
semiannual coupon payments and has a coupon rate of 9.2%.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 3 decimal places.)
a.
What is the yield to maturity if the bond is selling for
$960?
Yield to maturity
%
b.
What is the yield to maturity if the bond is selling for
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Yield to maturity
%
c.
What is the yield to maturity if...

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