Question

Label answers a, b, c

Last year Carson Industnes issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be caled in 6 years at a pnce of $1,065 and it sells for $1,200. a. What is the bond's nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places What is the bond's nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places. Would an investor be more likely to earn the YIM or the YIC b. What is the current yield? (Hint: Refer to Footnote 7 for the definition of the current yield and to Table 71) Round your answer to two decimal places Is this yield affected by whether the bond is lkely to be called? 1. If the bond is called, the current yield and the capital gains yield will remain the same, 11. Ifthe bond is called, the capital gains vield will remain the same but the curtent yield will be diferent 111. 11 the bond is called, the current yield and the capital gains yield will both be déferent IV. If the bond is called, the current yield and the capital gains yield will remain the same but the coupon rate will be different V. I the bond s called, the current yeld will remain the same but the capital gairs yield will be deferent C. What is the expected capital gains (or loss) yeeld for the coming year? Use amounts calculated in above requirements for calcuation, if reqired. Round your arnwer to two deomal places Enter a loss percentage, d any, with a manus sign is thes yseld dependend on whether the bond is expected to be called? 1 If the bond is not espected to be called, the appropriate espected total return is the YIC 11. " the bond s expected to be called, the appropriate expected tota! retsen will not change. าเ11. The espected capital trases tor loss) redd fo' the (omurng yea, depends on whether or not the bord is expected to tse canna TV , Tho expected captal gains (or ioss) V.eld for te coring year does not depend en wheter or not the bon, is expected to be called. V. It the bond is expected to be called, the appropriate expected total return is the YIM

Answer 1

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Home ert Page Layout Formulas Data Review V Add-Ins 義Cut aCopy Format Painter 11 Arap Text Fill В า 프. m. a-Δ. Ξミ 迣锂函Merge & Center. $, % , 弼皛Conditional Format. Cell. Insert Delete Format Sort &Find & Formatting as Table Styles ClearFilter Select Clipboard Font Alignment Cells dting CW CX CY cz DA DB DC DE DF DG DH DI DJ 416 417 418 419 420 421 422 423 424 a 425 426 427 428 429 b 430 431 432 433 434 carson 13% semi annual 1000 1200 coupon coupon (S) periods YTM 130 excel -RATE(CZ417*CZ422,-CZ421/CZ422,CZ420,-CZ419) 4.81% semi annual 9.63% ANNUAL called in call price 1065 YTC YTC excel -RATE(CZ426 CZ422,-CZ421/CZ422,CZ420,-CZ427) 4.70% semi annual 9.39% annual would an investor be more likley to earn the YTM or the YTC since YTC is BELOW the YTM, the bond is likely to be called, YTC will be earned Sheet2 AFN BANKING NOTE BIDDING UNDERWRITING EUAC AW PM LIFE LP IP MRP. INFLATION YIELD WARRANT efund bond CLEAN INVOICE PRICE Sheet1 齞"z 1鳳..ctl t@ mネ4c ENG 08-03-2019

Home ert Page Layout Formulas Data Review V % Cut ta copy." Add-Ins Fill В า 프. m. a-Δ. Ξミ 迣锂函Merge & Center. $, % , 弼皛Conditional Format. Cell. Insert Delete Format Sort &Find & Format Painter Formatting as Table Styles ClearFilter Select Clipboard CX452 CW Font Alignment Cells dting CX CY cz DA DB DC DE DF DG DH DI DJ 437 438 b 439 440 441 442 443 what is current yield current yield interest/ current price (Interest-13% of 1000) 130/1200 10.83% is this yield affected by whether the bond is likely to be called if the bond is called, current yield will remain the same, but the capital gains yield will be different 445 с 446 447 448 449 450 451 452 453 454 455 what is the expected capital gains (or loss) yield for the coming year The expected capital gains yield-YTM-current yield-9.63%-10.83% 1.21% is this yield affected by whether the bond is likely to be called the expected capital gain(loss) yield for coming year depends on whether the bond is called or not Sheet2 AFN BANKING NOTE BIDDING UNDERWRITING EUAC AW PM LIFE LP IP MRP. INFLATION YIELD WARRANT efund bond CLEAN INVOICE PRICE Sheet1 齞"z 1鳳..ctl t@ mネ4c ENG 08-03-2019