Question

Kasey Corp. has a bond outstanding with a coupon rate of 5.94 percent and semiannual payments.

2. Kasey Corp. has a bond outstanding with a coupon rate of 5.94 percent and semiannual payments. The bond has a yield to maturity of 5.1 percent, a par value of $2,000, and matures in 20 years. What is the quoted price of the bond?

3. A bond with a current yield of 6.64 percent is quoted at 96.171. What is the coupon rate of the bond:?

4. Footsteps Co. has a bond outstanding with a coupon rate of 5.7 percent and annual payments. The bond currently sells for $927.87, matures in 13 years, and has a par value of $1,000. What is the YTM of the bond?

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Answer #1

2). FV = 2,000; PMT (semi-annual coupon) = 5.94%*2,000/2 = 59.40; Rate (semi-annual YTM) = 5.1%/2 = 2.55%; N = 15*2 = 30, solve for PV. Price = 2,209.10

3). Current yield = coupon/price (assuming that par value = 100)

Coupon = 6.64%*96.171 = 6.39 so coupon rate = 6.39% (Note: it is assumed that bond is annual.)

4). FV = 1,000; PV = 927.87; PMT (annual coupon) = 5.7%*1,000 = 57; N = 13, solve for RATE.

Annual YTM = 6.54%

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