SHOW STEP BY STEP SOLUTION ANSWER IS 6.44%
Homework Answers
Suppose the face value of the bond be $1000
Present value or the current selling price=$1100
Coupon interest rate=7.25%
Coupon payment=(Coupon interest rate)*(Face
value)=7.25%*1000=72.5
Time period=25 years
We can determine the expected rate of return (or the yield to
maturity) using excel.
As the present value is a cash outflow, we have taken it as negative in excel.
So, the expected rate of return is 6.44%
Add Answer to:
SHOW STEP BY STEP SOLUTION ANSWER IS 6.44%
PepsiCo is selling bonds for $1,100. The coupon...
Show step by step process to answer each of the following. Correct Answers: 7)4.50% 8) 3.632%...
Show step by step process to answer each of the following.
Correct Answers:
7)4.50%
8) 3.632%
9)5.56%
(7-7) You are considering the purchase of a coupon bond that has a face value of $1,000, pays 3.80% semi-annual coupons, and matures in 8 years. If this bond is currently selling for $953.41, estimate its yield-to-maturity (YTM). (7-8) Currently, the nominal rate prevailing in the market is 7%. If inflation is expected to be 3.25%, estimate the actual real interest rate. (7-9)...
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Can you show your work or calculator steps? A 40-year maturity bond has a 7% coupon...
Can you show your work or calculator steps?
A 40-year maturity bond has a 7% coupon rate, paid annually. It sells today for $90742. A 30-year maturity bond has a 6.5% coupon rate, also paid annually. It sells today for $919.5. A bond market analyst forecasts that in five years, 35-year maturity bonds will sell at yields to maturity of 8% and that 25-year maturity bonds will sell at yields of 7.5%. Because the yield curve is upward-sloping, the analyst...
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SHOW STEP BY STEP SOLUTION ANSWER IS 5.29% Hershey Co. is offering a bond with a...
SHOW STEP BY STEP SOLUTION ANSWER IS 5.29%
Hershey Co. is offering a bond with a 4.45% coupon interest rate, a par value of $1,000, and a market price of $850. What is the current yield of the bond?
PLEASE SHOW YORK WORK!! STEP BY STEP! Posting just the answers or excel spreadsheet doesnt help...
PLEASE SHOW YORK WORK!! STEP BY STEP! Posting just the answers
or excel spreadsheet doesnt help me
Question 2 A firm issues a bond today with a $1,000 face value, an 8% coupon interest rate, and a 25-year maturity. An investor purchases the bond for $1,000. (2.1) What is the yield to maturity (YTM)? Explain. (2.2) Suppose the investor bought the bond described previously for $900. What is the YTM? (2.3) Suppose the bond described previously has a price of...
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Tom bought 5 bonds with $1,000 face value for $1,100 5 years ago. The coupon rate is 8%. Tom sold the bond for $900 today. What is Tom’s total percentage return?
Please solve, show work, and give detail explanation 1. A firm has 9.2% coupon bonds on the market with nine years to ma...
Please solve, show work, and give detail explanation
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10. Long-term Treasury bonds currently are selling at yields to maturity of nearly 6%. You expect...
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Show step by step process to answer each of the following.
Correct Answers:
7)4.50%
8) 3.632%
9)5.56%
(7-7) You are considering the purchase of a coupon bond that has a face value of $1,000, pays 3.80% semi-annual coupons, and matures in 8 years. If this bond is currently selling for $953.41, estimate its yield-to-maturity (YTM). (7-8) Currently, the nominal rate prevailing in the market is 7%. If inflation is expected to be 3.25%, estimate the actual real interest rate. (7-9)...
Can you show your work or calculator steps?
A 40-year maturity bond has a 7% coupon rate, paid annually. It sells today for $90742. A 30-year maturity bond has a 6.5% coupon rate, also paid annually. It sells today for $919.5. A bond market analyst forecasts that in five years, 35-year maturity bonds will sell at yields to maturity of 8% and that 25-year maturity bonds will sell at yields of 7.5%. Because the yield curve is upward-sloping, the analyst...
SHOW STEP BY STEP SOLUTION ANSWER IS 5.29%
Hershey Co. is offering a bond with a 4.45% coupon interest rate, a par value of $1,000, and a market price of $850. What is the current yield of the bond?
PLEASE SHOW YORK WORK!! STEP BY STEP! Posting just the answers
or excel spreadsheet doesnt help me
Question 2 A firm issues a bond today with a $1,000 face value, an 8% coupon interest rate, and a 25-year maturity. An investor purchases the bond for $1,000. (2.1) What is the yield to maturity (YTM)? Explain. (2.2) Suppose the investor bought the bond described previously for $900. What is the YTM? (2.3) Suppose the bond described previously has a price of...
Please solve, show work, and give detail explanation
1. A firm has 9.2% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 106.8 percent of par. What is the yield-to- maturity (YTM) on these bonds? 2. An investment offers a 10.5 percent total return over the coming year. Sam thinks that the total real return on this investment will be only 4.5 percent. What does Sam believe the inflation rate...
10. Long-term Treasury bonds currently are selling at yields to maturity of nearly 6%. You expect interest rates to fall. The rest of the market thinks that they will remain unchanged over the coming year. In each question, choose the bond that will provide the higher holding-period return over the next year if you are correct. Briefly explain your answer. a. i.A Baa-rated bond with coupon rate 6% and time to maturity 20 years. i. An Aaa-rated bond with coupon...
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