Question

What is the yield to maturity for the following bonds? Assume these are bonds issued in...

What is the yield to maturity for the following bonds? Assume these are bonds issued in the U.S. Use the Excel RATE function to solve.

25 years to maturity, 8.5% coupon rate, current price is $1,030. Round answer to 2 decimal places.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The bonds issued in the U.S. typically pay coupons semi-annually. So, we multiply the result from rate function by 2 to get the yield to maturity

25 years to maturity, 8.5% coupon rate, current price is $1,030.

Yied to maturity = RATE(nper, pmt, pv, [fv], [type], [guess]) * 2

nper = 25 * 2 = 50 semi-annual payments

pmt = 1000 * 0.085/2 = 42.5

pv = -1030

[fv] = 1000

Ignore [type] and [guess] as they are optional

Yied to maturity =RATE(50, 42.5, -1030, 1000) * 2

Yield to maturity = 4.107763% * 2

Yield to maturity = 0.08215526

Yield to maturity = 8.215526%

Yield to maturity = 8.22%

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
11-What is the approximate yield to maturity for the following bonds? Assume these are bonds issued...
11-What is the approximate yield to maturity for the following bonds? Assume these are bonds issued in the United States. a.5 years to maturity, 6 percent coupon rate, current price is $950. b.10 years to maturity, 0 percent coupon rate, current price is $339. c.15 years to maturity, 8.5 percent coupon rate, current price is $1030.
Fifteen years ago, Namson and Co. issued 25-year coupon bonds. The yield to maturity at the...
Fifteen years ago, Namson and Co. issued 25-year coupon bonds. The yield to maturity at the time of issuance was 10 percent and the bonds sold at 120% of par value. The bonds are currently selling at 85% of par value. What is the current yield to maturity for these bonds? [Assume that the coupon is paid annually]. (Round your answer to 2 decimal places and record as a percent but without a percent sign. For example, record 18.3893 8.47...
Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to maturity....
Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. What is the yield to maturity at a current market price of $861?Round your answer to two decimal places. 2. What is the yield to maturity at a current market price of $1,152? Round your answer to two decimal places. %
Maxcorp’s bonds sell for $1,152.98. The bond life is 9 years, and the yield to maturity...
Maxcorp’s bonds sell for $1,152.98. The bond life is 9 years, and the yield to maturity is 8.5%. What is the coupon rate on the bonds? (Assume a face value of $1,000 and annual coupon payments.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
1. Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to...
1. Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8% What is the yield to maturity at a current market price of $1,062? Round your answer to two decimal places. 2. Yield to Maturity and Call with Semiannual Payments Thatcher Corporation's bonds will mature in 11 years. The bonds have a face value of $1,000...
Fibbo, Inc. issued one year ago annual coupon paying bonds that orignially had 13 years to...
Fibbo, Inc. issued one year ago annual coupon paying bonds that orignially had 13 years to maturity. These bonds have a face value of $1,000 and a current market value of $1,030. At this market value, the bonds have a yield-to-maturity of 4.14% What is the coupon rate for these bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Current yield, capital gains yield, and yield to maturity Hooper Printing Inc. has bonds outstanding with...
Current yield, capital gains yield, and yield to maturity Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $910.30. The capital gains yield last year was - 8.97%. What is the yield to maturity? Round your answer to two decimal places.    % For...
Yield to Maturity and Yield to Call Arnot International's bonds have a current market price of...
Yield to Maturity and Yield to Call Arnot International's bonds have a current market price of $1,250. The bonds have a 10% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = 1,090). What is the yield to maturity? Round your answer to two decimal places.   % What is the yield to call if they are called in 5 years? Round...
The Brownstone Corporation's bonds have 6 years remaining to maturity. Interest is paid annually, the bonds...
The Brownstone Corporation's bonds have 6 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. What is the yield to maturity at a current market price of $810? Round your answer to two decimal places. % What is the yield to maturity at a current market price of $1,118? Round your answer to two decimal places. %.   I followed the formulas and it comes back incorrect looking...
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 25 years to maturity, and a coupon rate of 7.1 percent paid annually. If the yield to maturity is 8.2 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT