Question

a bond with a par value of $1000 has a 14-year maturity and an 9.5% annual...

a bond with a par value of $1000 has a 14-year maturity and an 9.5% annual coupon. The bond has a current yield of 8%. What is the bond's yield to maturity ?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Coupon Payment= 1000*0.095= $95
Bond price= Coupon payment/ current yield
                     = 95/0.08= $1187.50
Bond price= $1187.50
Calculation of Yield to maturity
Interest (1000*0.095`) 95
Face value $1000
Bond price $1187.50
Years to maturity 14
Yield to maturity= Interest+ (Face value-Bond price)/years to maturity      
(face value + bond price)/2
95+(1000-1187.50)/14
(1000+1187.50)/2
Yield to maturity 7.46%
Therefore yield to maturity is 7.46%
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 14-year, 14% semiannual coupon bond with a par value of $1000 may be called in...
A 14-year, 14% semiannual coupon bond with a par value of $1000 may be called in 5 years at a call price of $1030. The bond sells for $1150 (assume the bond has just been issued). a. What is the bond's yield to maturity? b. What is the bond's current yield? c. What is the bond's capital gain or loss yield? d. What is the bond's yield to call?
Price the following: 12-year, $1000 par value, 6% semi-annual coupon bond whose current nominal yield-to-maturity (YTM)...
Price the following: 12-year, $1000 par value, 6% semi-annual coupon bond whose current nominal yield-to-maturity (YTM) is 8%. 10-year, $1000 par value, 8% quarterly coupon bond whose current nominal YTM is 7%. 30-year, $1000 par value, zero-coupon bond whose current nominal YTM is 9.5%. 13-year, $1000 par value, 8% monthly coupon bond whose current nominal YTM is 10%. 5-year, $500 par value, 8% semi-annual coupon bond whose current nominal YTM is 8.25%
A bond with 1000 par value, has 14 years left to maturity has a coupon rate...
A bond with 1000 par value, has 14 years left to maturity has a coupon rate of 10% with semi-annual coupon payments. The current yield to maturity is 11.5%. What is the current yield? 12.78% 11.15% 11.95% 13.64% 14.51%
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The...
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The required rate of return (yield to maturity)on the bond is 8.5%. Compute the price of the bond today using the appropriate Excel formula Compute the price of the same bond if it has 10 years remaining to maturity instead of 11. What is the capital gains yield on the bond? What is the current yield on the bond? What is the total yield on...
A 25 year, $1000 par value bond has an 8.5% annual payment coupon. The bond currently...
A 25 year, $1000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $790. If the yield to maturity remains at its current rate, what will the price be 5 years from now?
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?
The market price is ​$725 for a 14​-year bond ​($1000 par​ value) that pays 11 percent...
The market price is ​$725 for a 14​-year bond ​($1000 par​ value) that pays 11 percent annual​ interest, but makes interest payments on a semiannual basis ​(5.5 percent​ semiannually). What is the​ bond's yield to​ maturity?
A bond that matures in 14 years has a ​$1000 par value. The annual coupon interest...
A bond that matures in 14 years has a ​$1000 par value. The annual coupon interest rate is 9 percent and the​ market's required yield to maturity on a​ comparable-risk bond is 13 percent. What would be the value of this bond if it paid interest​ annually? What would be the value of this bond if it paid interest​ semiannually? a.  The value of this bond if it paid interest annually would be ​$?
1) A 2-year maturity bond with face value of $1000 makes annual coupon payments of $80....
1) A 2-year maturity bond with face value of $1000 makes annual coupon payments of $80. At a yield to maturity of 8 percent, the bond must be selling for 2) A 2-year maturity bond with face value of $1000 makes annual coupon payments of 8 percent per annum and is currently selling at par. What return will you earn on the bond if you buy it today and sell it at the end of the year when the yield...
A 20-year, 8% annual coupon bond with a par value of $1,000 may be called in...
A 20-year, 8% annual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.) Basic Input Data: Years to maturity: 20 Periods per year: 1 Periods to maturity: 20 Coupon rate: 8% Par value: $1,000 Periodic payment: $80 Current price $1,100 Call price: $1,040 Years till callable: 5 Periods till callable: 5 a.   What is the bond's...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT