Homework Answers
Answer:
(2) Using the given formula of YTM, we get:
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2. The market price of a 4%, 10 year bond is $800. Determine the bond's Current...
The Pioneer Petroleum Corporation has a bond outstanding with an $70 annual interest payment, a market...
The Pioneer Petroleum Corporation has a bond outstanding with an $70 annual interest payment, a market price of $890, and a maturity date in five years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) a....
1. An investor must choose between two bonds: Bond A pays $102 annual interest and has...
1. An investor must choose between two bonds: Bond A pays $102 annual interest and has a market value of $890. It has 10 years to maturity. I Bond B pays $88 annual interest and has a market value of $800. It has five years to maturity. Assume the par value of the bonds is $1,000. What is the approximate yield to maturity on Bond B? The exact yield to maturity? (Use the approximation formula to compute the approximate yield...
Finance 4200 In Class Problem Bonds Given: Bond Face or Par Value: $1,000 Current Market Price:...
Finance 4200 In Class Problem Bonds Given: Bond Face or Par Value: $1,000 Current Market Price: $995.34 Time to Maturity: 11 years Coupon: S30 per year, paid semiannually Bond is callable in five years at $1,030 a. What is the bond's coupon rate? b. What is the bond's current yield? c. What is the bond's yield to maturity? (Use financial calculator to solve, list all keystrokes) d. What is the bond's yield to call? (Use financial calculator to solve, list...
4. The current yield on bond B, which has semiannual coupons, is 7.08% and the bond...
4. The current yield on bond B, which has semiannual coupons, is 7.08% and the bond was sold at par (i.e., at a price of $1,000) three years ago, when the YTM on similar bonds was 8.0%. If there are 12 years until maturity, what would be the YTM to an investor who buys the bond today? (Hint: If the bond's price was $1,000 three years ago, when the market interest rate was 8.0%, what must be the coupon rate?...
An investor is considering purchasing a bond with a 7.83 percent coupon interest rate, a par...
An investor is considering purchasing a bond with a 7.83 percent coupon interest rate, a par value of $1,000, and a market price of $870.83. The bond will mature in nine years. Based on this information, answer the following questions: a. What is the bond's current yield? b. What is the bond's approximate yield to maturity? c. What is the bond's yield to maturity using a financial calculator? Note: Assume coupon payments are paid annually a. The bond's current yield...
An investor must choose between two bonds: Bond A pays $92 annual interest and has a...
An investor must choose between two bonds: Bond A pays $92
annual interest and has a market value of $825. It has 15 years to
maturity. Bond B pays $83 annual interest and has a market value of
$720. It has seven years to maturity. Assume the par value of the
bonds is $1,000. a. Compute the current yield on both bonds. (Do
not round intermediate calculations. Input your answers as a
percent rounded to 2 decimal places.)
Bond A...
An investor is considering purchasing a bond with a 7.45 percent coupon interest rate, a par...
An investor is considering purchasing a bond with a 7.45 percent coupon interest rate, a par value of $1,000, and a market price of $1,033.31. The bond will mature in nine years. Based on this information, answer the followingquestions: a. What is the bond's current yield? b. What is the bond's approximate yield to maturity? c. What is the bond's yield to maturity using a financial calculator? Note: Assume coupon payments are paid annually a. The bond's current yield is...
An investor must choose between two bonds: Bond A pays $85 annual interest and has a...
An investor must choose between two bonds: Bond A pays $85 annual interest and has a market value of $850. It has 10 years to maturity. Bond B pays $80 annual interest and has a market value of $780. It has five years to maturity. Assume the par value of the bonds is $1,000. a. Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) b. Which...
Question 4: (10 points). (Yield to maturity) A bond's market price is $950. It has a...
Question 4: (10 points). (Yield to maturity) A bond's market price is $950. It has a $1,000 par value, will mature in 14 years, and has a coupon interest rate of 8 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 28 years? What if it matures in 7 years? (Round to two decimal places.) The bond's yield to maturity...
The market price is $800 for a 19-year bond ($1,000 par value) that pays 11 percent...
The market price is $800 for a 19-year bond ($1,000 par value) that pays 11 percent annual interest, but makes interest payments on a semiannual basis (5.5 percent semiannually). What is the bond's yield to maturity?
1. An investor must choose between two bonds: Bond A pays $102 annual interest and has a market value of $890. It has 10 years to maturity. I Bond B pays $88 annual interest and has a market value of $800. It has five years to maturity. Assume the par value of the bonds is $1,000. What is the approximate yield to maturity on Bond B? The exact yield to maturity? (Use the approximation formula to compute the approximate yield...
Finance 4200 In Class Problem Bonds Given: Bond Face or Par Value: $1,000 Current Market Price: $995.34 Time to Maturity: 11 years Coupon: S30 per year, paid semiannually Bond is callable in five years at $1,030 a. What is the bond's coupon rate? b. What is the bond's current yield? c. What is the bond's yield to maturity? (Use financial calculator to solve, list all keystrokes) d. What is the bond's yield to call? (Use financial calculator to solve, list...
4. The current yield on bond B, which has semiannual coupons, is 7.08% and the bond was sold at par (i.e., at a price of $1,000) three years ago, when the YTM on similar bonds was 8.0%. If there are 12 years until maturity, what would be the YTM to an investor who buys the bond today? (Hint: If the bond's price was $1,000 three years ago, when the market interest rate was 8.0%, what must be the coupon rate?...
An investor must choose between two bonds: Bond A pays $92
annual interest and has a market value of $825. It has 15 years to
maturity. Bond B pays $83 annual interest and has a market value of
$720. It has seven years to maturity. Assume the par value of the
bonds is $1,000. a. Compute the current yield on both bonds. (Do
not round intermediate calculations. Input your answers as a
percent rounded to 2 decimal places.)
Bond A...
Question 4: (10 points). (Yield to maturity) A bond's market price is $950. It has a $1,000 par value, will mature in 14 years, and has a coupon interest rate of 8 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 28 years? What if it matures in 7 years? (Round to two decimal places.) The bond's yield to maturity...
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