Question

Bonds of Francesca Corporation with a par value of $1,000 sell for $930, mature in five years, and have a 8% annual coupon rate paid semiannually. Do not round intermediate calculations. Round your answers to two decimal places. Calculate: current yield.    % annually yield to maturity, to the nearest basis point.    % annually horizon yield (or realized return) for an investor with a two-year holding period and a reinvestment rate of 7% over the period. At the end of two years, the 8% coupon bonds with three years remaining will sell to yield 8%.   % annually

Answer 1

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06:43 dx 8 ENG 05 01 2020 х BOND - EXcel plavin mandura O Tell me what you want to do Page Layout Tomulas I lelp A Share Tile Ilome Insert Dala Review View X Cut Σ AitaSum - v11 b Wrap Text Calibri General A Copy O Fill - Conditional Farmat as Cell Paste Insert Delete Format Sart & Find & = = = E = E Merge & Center - A- BIU- - • Clear Format Painter Formatting- Table- Styles- Filter - Select- Clipbcard Font Aignmert Number Styies Cels Edeng CT110 CV CL CM CN CO CP CQ CR CS CT CU CW Сх 140 80/930 = current yield = coupon/ price = 141 8.60% a 142 PRICE OF THE BOND 143 930.00 144 COUPON RATE 8.00% PAR VALUE 145 1000 YEARS 146 COUPON($) NO OF PERIODS SEMI ANNUAL YTM 147 40.00 148 10 149 4.90% [=RATE(CP148,-CP147,CP143,-CP145)] 150 YTM 9.80% 151 152 SEMI ANNUAL COUPON 40.00 COUPONS ARE INVESTED FOR 2 YEARS REINVESTMENT RATE 153 7.00% 154 SEMI ANNUAL RATE 3.50% 155 HOLDING PERIOD NO OF PERIODS 156 4 168.60 [=FV(CP154,CP156,-CP152)] 157 FV OF COUPONS 158 WARRANI refund YIELD SPOT Sheet2 AFN BANKING NOTE S1 S3 | CLEAN PRICE S10 BIDDING, UNDERWRITING EUAC AW LIFE LP, IP, MRP, INFLATION S5!.. 54 Readr circuar References -+ 150%

06:43 dx 8 ENG 05 01 2020 х BOND - EXcel pravin mandura O Tell me what you want to do Page Layout Tomulas I lelp A Share Tile Home Insert Data Review View X Cut Σ AitaSum - v11 b Wrap Text Calibri General a Copy- O Fill - Paste Conditional Farmat as Cell Insert Delete Format Sart & Find & - A- E Merge & Center BIU- E E • Clear Format Painter Formatting- Table- Styles- Filter - Select- Clipbcard Font Alignmert Number Styies Cels Edeng CT175 CL CM CN CO CP CQ CR CS CT CU CV CW Сх FV OF COUPONS 168.60 [=FV(CP154,CP156,-CP152)] 157 158 159 AFTER 2 YEARS 160 YTM 8.00% SEMI ANNUAL YTM 4.000% 161 162 YEARS TO MATURITY NO OF PERIODS 163 1000.00 [=PV(CR161,CP163,-CP147,-CP145)] SALE PRICE 164 165 166 PO = PURCHASE PRICE = GIVEN 930.00 167 NOW 1168.60 [1000 + 168.60] 168 P1 169 YEARS 170 SEMI ANNUAL RATE = 5.88% [=RATE(CP169,-CP167,CP168)] 171 ANSWER HORIZON YIELD = 11.75% 172 173 174 175 S3 | CLEAN PRICE S10 BIDDING, UNDERWRITING EUAC AW LIFE | LP, IP, MRP, INFLATION WARRANI refund YIELD SPOT Sheet2 AFN HANKING NOTE S1 S5!.. 54 Readr circuar References -+ 150%