Question

Yield to maturity

The Salem Company bond currently sells for $507.30, has a coupon interest rate of 6% and a $1000 par value, pays interest annually, and has 11 years to maturity.

a. Calculate the yield to maturity on this bond.

b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond.

Answer #2

ANSWER IN THE IMAGE **((YELLOW HIGHLIGHTED)**. FEEL
FREE TO ASK ANY DOUBTS**. THUMBS UP PLEASE. THUMBS UP
PLEASE.**

**1. 15.67%**

**2.** When the Interest rate (Yield ) in the
market increases than the Bond price decreases.

And

When the Interest rate (Yield ) in the market decreases than the
Bond price increases.

There is an inverse relationship between change in market yield and
change in bond price.

The bond with higher coupon rate has higher YTM.

answered by: anonymous

The Salem Company has a bond outstanding that currently sells
for $955, has a 10 % coupon rate and a $1000 par value, pays
interest annually, and has 12 years to maturity. What is the yield
to maturity on this bond?

Question 6.21
Yield to maturity – The Egoli company bond currency sells for
R955, has a 12% coupon interest rate
And a R1000 par value pays interest annually and has 15 years to
maturity
a.Calculate the yield to maturity (YTM) on this bond
b.Explain the relationship that exists between the coupon
interest rate and yield to maturity and between the par value and
market value of a bond

Par value
Coupon interest rate
Years to maturity
Current value
$500
8%
20
$320
Yield to maturity The bond shown in the following table pays
interest annually
a. Calculate the yield to maturity (YTM) for the bond. b.
What relationship exists between the coupon interest rate and yield
to maturity and the par value and market value of a bond?
Explain.

A $1,000 face value
bond currently has a discount rate (yield-to-maturity) of 6.69
percent. The bond matures in three years and pays coupon annually.
The coupon rate is 7 percent. What type of bond it is?
Group of answer choices
Premium bond
Discount bond
Par bond
Zero-coupon bond

Nathan owns $1000 par value of Caterpillar bonds.The bond has a
5% coupon rate, pays interest semi-annually, has 10 years to
maturity and is currently priced at $1,100. What is the yield to
maturity for this bond?
A) 1.89%
B) 3.78%
C) 5.00%
D) 6.25%

Assume a corporation's bond has 19 years remaining until
maturity. The coupon interest rate is 8.9% and the bond pays
interest semi-annually. Assume bond investors' required rate of
return on the bond is 9.6%. What would be the expected market price
of this bond. (Assume a $1000 par value.)

A bond has a coupon rate of 3%, pays interest semiannually,
sells for $950, and matures in 3 years. Face value=1000
a) Calculate the approximate YTM (yield to maturity).
b) Calculate the YTM, using a financial calculator.
c) What is the difference between the approximate YTM and the
Real YTM in (b)?

1. Omega Enterprises has an 8% coupon bond with exactly 16 years
to maturity. Interest is paid semi-annually. The bond is priced at
$1,125 per $1,000 of face value. a.) What is the yield to maturity
on this bond? b.)An investor purchased the bond at $1,125 and sold
it 5 years later at a price of $1,023. What was the investor’s
return. (Hint: calculate the YTM as in a) above but use the sale
price as the future value.
2....

Assume a corporation's bond has 15 years remaining until
maturity. The coupon interest rate is 9.4% and the bond pays
interest semi-annually. Assume bond investors' required rate of
return on the bond is 9.7%. What would be the expected market price
of this bond. (Assume a $1000 par value.) Answer to 2 decimal
places.

A.Bond Prices A $1,000 par bond that pays
interest semiannually has a quoted coupon rate of 7%, a promised
yield to maturity of 7.7% and exactly 6 years to maturity. What is
the bond's current value?
B.Bond Prices A $1,000 par bond that pays
interest semiannually has a quoted coupon rate of 5%, a promised
yield to maturity of 5.7% and exactly 11 years to maturity. The
present value of the coupon stream represents ______ of the total
bond's value....

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