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Chapter 6 - Master it! In an earlier worksheet we discussed the difference between yield to...
A company has the following bond outstanding. The bond is callable every year on May 1st,...
A company has the following bond outstanding. The bond is callable every year on May 1st, the anniversary date of the bond. The bond has a deferred call with three years left. The call premium on the first call date is one year's interest. The call premium will decline by 10 percent of the original call premium for 10 years. Eleven years from today, the call premium will be zero. Given the following information, what is the yield to worst...
1. Bond A sells at a premium, so the YTM must be less than the coupon...
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
Calculation and Interpretation of traditional yield measures for fixed-rate bonds. Their assumptions and limitations. 1. Consider...
Calculation and Interpretation of traditional yield measures for fixed-rate bonds. Their assumptions and limitations. 1. Consider a 20-year, $1,000 par value, 6% semiannual-pay bond that is currently trading at $802.07. Calculate the current yield, the YTM, and the BEY 2. A bond with 5 years remaining until maturity is currently trading for 101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semiannually. The bond is first callable in 3 years, and is callable...
Problem 10-22 Yield to Call (LO1, CFA3) Fooling Company has a callable bond outstanding with a coupon of 11.8 percent,...
Problem 10-22 Yield to Call (LO1, CFA3) Fooling Company has a callable bond outstanding with a coupon of 11.8 percent, 25 years to maturity, call protection for the next 10 years, and a call premium of $50. What is the yield to call (YTC) for this bond if the current price is 108 percent of par value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Yield to call
3 Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semiannual...
3 Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semiannual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99. What is the bond's yield to maturity? а. а. b. b What is its yield to call? What is its yield to worst? с. С.
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond...
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 12% and $1,000 par value. The issuer, however, can call the bond starting at the end of 10 years. If the yield to call on this bond is 5% and the call requires Corso Books to pay one year of additional interest at the call (2 coupon payments), what is the bond price if priced with the assumption...
Boeing Corporation has just issued a callable at par) three-year, 5.3% coupon bond with semi-annual coupon...
Boeing Corporation has just issued a callable at par) three-year, 5.3% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99.49. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst?
Boeing Corporation has just issued a callable (at par) three-year, 5.4% coupon bond with semi-annual coupon...
Boeing Corporation has just issued a callable (at par) three-year, 5.4% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99.46. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst?
Fooling Company has a callable bond outstanding with a coupon of 11.4 percent, 25 years to...
Fooling Company has a callable bond outstanding with a coupon of 11.4 percent, 25 years to maturity, call protection for the next 10 years, and a call premium of $25. What is the yield to call (YTC) for this bond if the current price is 103 percent of par value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) eBook Yield to call Dit References
Fin 445 ABC Inc. has two callable bonds outstanding on the market, both with 12 years...
Fin 445 ABC Inc. has two callable bonds outstanding on the market, both with 12 years to maturity, call protection for the next 5 years, and a call premium of $100. Bond A has a 9% coupon and is priced at 117% of par. Bond B has a 5% coupon and is priced at 74.60% of par. What is the market yield for these two bonds? 1.
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
Calculation and Interpretation of traditional yield measures for fixed-rate bonds. Their assumptions and limitations. 1. Consider a 20-year, $1,000 par value, 6% semiannual-pay bond that is currently trading at $802.07. Calculate the current yield, the YTM, and the BEY 2. A bond with 5 years remaining until maturity is currently trading for 101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semiannually. The bond is first callable in 3 years, and is callable...
Problem 10-22 Yield to Call (LO1, CFA3) Fooling Company has a callable bond outstanding with a coupon of 11.8 percent, 25 years to maturity, call protection for the next 10 years, and a call premium of $50. What is the yield to call (YTC) for this bond if the current price is 108 percent of par value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Yield to call
3 Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semiannual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99. What is the bond's yield to maturity? а. а. b. b What is its yield to call? What is its yield to worst? с. С.
Boeing Corporation has just issued a callable at par) three-year, 5.3% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99.49. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst?
Fooling Company has a callable bond outstanding with a coupon of 11.4 percent, 25 years to maturity, call protection for the next 10 years, and a call premium of $25. What is the yield to call (YTC) for this bond if the current price is 103 percent of par value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) eBook Yield to call Dit References
Fin 445 ABC Inc. has two callable bonds outstanding on the market, both with 12 years to maturity, call protection for the next 5 years, and a call premium of $100. Bond A has a 9% coupon and is priced at 117% of par. Bond B has a 5% coupon and is priced at 74.60% of par. What is the market yield for these two bonds? 1.
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