Callaghan Motor’s bonds have 7 years remaining to maturity. Interest is paid annually, the bonds have...

Question

Question

Callaghan Motor’s bonds have 7 years remaining to maturity. Interest is paid annually, the

bonds have a $1,000 par value, and the coupon interest rate is 5.5 percent. The bonds have a yield to maturity of 8 percent.

1). What is the current market price of these bonds?

$869.84

2). What is the current yield?

6.32%

3). What is the capital gains yield?

1.68%

4). These bonds sell at

a. par b. a premium c. a discount

Discount. Please show all worked typed as I am on mobile

Answer 1

Answer #1

NOTE Bonds current market price is calculated using EXCEL FUNCTION PV(rate, nper,pmt,fv,type) where rate-896; nper=7; pmt-55

Answer 2

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