Question

A STRIPS with 10 years until maturity and a face value of $10,000 is trading for...

A STRIPS with 10 years until maturity and a face value of $10,000 is trading for $7,680. What is the yield to maturity?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
                  K = N
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N
                   k=1
                  K =10
7680 =∑ [(0*10000/100)/(1 + YTM/100)^k]     +   10000/(1 + YTM/100)^10
                   k=1
YTM% = 2.67
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
a) A treasury STRIPS with 13 years until maturity has a face value of $10,000.   It’s...
a) A treasury STRIPS with 13 years until maturity has a face value of $10,000.   It’s trading at a price of $4,131. What’s the YTM of the STRIPS? b) Suppose the real rate is 2% and the inflation is currently at 2.5%.   What will you expect the yield on the treasury bills?   c) A coupon bond with 5 years to maturity has a face value of $1,000 and a coupon of $40 a year.   It’s trading at a price of...
What is the price of a STRIPS with a maturity of 10 years, a face value...
What is the price of a STRIPS with a maturity of 10 years, a face value of $10,000, and a yield to maturity of 6.4 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of a STRIPS
a bond has a face value of $1000 and 14 years until maturity. the bond has...
a bond has a face value of $1000 and 14 years until maturity. the bond has a 3% APR coupon with semi- annual coupon payments. currently, investors seek a 6% APR yield to maturity to hold the bond. what is the current trading price of the bond?
Suppose General Motors Corporation issued a bond wth 10 years until maturity, a face value of...
Suppose General Motors Corporation issued a bond wth 10 years until maturity, a face value of $1000 and coupon rate of 7.8%(annual payments). The yield to maturity of the bond when it was issued was 5.9%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes the first coupon payment?
Kauffman has bonds outstanding with a face value of $1,000 and 10 years left until maturity....
Kauffman has bonds outstanding with a face value of $1,000 and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,175. 1. What is the yield to maturity? 2. What is the yield to call if they are called in 5 years, 6 years, 7 years and 9 years? 3. Which yield might investors expect to earn onb the bonds? Why? 4. The bond's indenture that the call provision gives the firm...
Kauffman has bonds outstanding with a face value of $1,000 and 10 years left until maturity....
Kauffman has bonds outstanding with a face value of $1,000 and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,175. A. What is the yield to maturity? B. What is the yield to call AND the yield to maturity if they are called in 5 years, 6 years, 7 years and 9 years? Prepare in excel for (a, b and d). C. Which yield might investors expect to earn on the...
A bond with a face value of $1,000 has 14 years until maturity, has a coupon...
A bond with a face value of $1,000 has 14 years until maturity, has a coupon rate of 7.6% and sells for $1,089 What is the current yield on the bond? What is the yield to maturity if interest is paid once a year? What is the yield to maturity if interest is paid semiannually?
A bond has a face (maturity) value of $1,000, 5 years until maturity, an annual coupon...
A bond has a face (maturity) value of $1,000, 5 years until maturity, an annual coupon rate of 7%, and a yield to maturity of 5%. How much will the bond price change in 1 year if the yield remains constant?
Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value...
Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 11% (annual payments). The yield to maturity on this bond when it was issued was 12. a. What was the price of this bond when it was issued? (Round to the nearest cent) b. Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes it first coupon payment? (Round...
Suppose BMW issued a bond with 10 years until maturity, a face value of $1000, and...
Suppose BMW issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. a. What was the price of this bond when it was issued? b. Assuming that the YTM remains constant, what is the price of the bond immediately before it makes the first coupon payment? c. Assuming that the YTM remains constant, what is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT