Using the formula for YTM (yield to maturity), what is the rate of return for a bond with a face value of $9000 purchased for $9,500 that pays a 4 % annual coupon. The bond will be held for 3 years before it is redeemed.
Using the formula for YTM (yield to maturity), what is the rate of return for a...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay. B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity. C) YTM = 0.92%, the average...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay. B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity. C) YTM = 0.92%, the average...
Yield to maturity (YTM) is the rate of return expected from n bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of those assumptions? The bond has an early redemption feature The bond will not be called Consider the case of Demed Inc Demed Inc. has 9% annual coupon bonds that are callable and have 18 years left inl matarity The bonds have a per...
5. The current (short-run) Yield Curve is as follows: Maturity (years1 Zero coupon YTM 4 4.70% 2 3 4.50% 4.00% 4.30% 4.80% a. What is the price today of a two year default-free bond with a face value of $1000 and an annual coupon rate of 6%. Does this bond trade at a discount, at par, or at a premium? b. Consider a four year, default-free bond with annual coupon payments and a face value of $1000 that is issued...
Problem 1: Using a Spreadsheet to Calculate Yield to Maturity What is the yield to maturity on the following bonds; all have a maturity of 10 years and a face value of $1,000, and a coupon rate of 9 percent (paid semiannually). The bonds' current market values are $945.50, $987.50, $1,090.00, and $1,225.875, respectively. Market Total Coupon Periodic Coupon Face SEMI-ANNUAL => Yield to Value (PV) Payments (NPER) Rate (ANNUAL) Payment (PMT) Value (FV) YTM (RATE) Maturity $945.50 20 9%...
Note: If not otherwise stated, assume that: • Yield-to-maturity (YTM) is an APR, semi-annually compounded • Bonds have a face value of $1,000 • Coupon bonds make semi-annual coupon payments; however, coupon rates (rc) are annual rates, i.e., bonds make a semi-annual coupon payment of rc/2 Four years ago, Candy Land Corp. issued a bond with a 14% coupon rate, semi-annual coupon payments, $1,000 face value, and 14-years until maturity. a) You bought this bond three years ago (right after...
a. What is the difference between coupon rate and yield to maturity? How do you use the coupon rate to calculate the periodic payment received from a bond? b. What is the price of a bond that is currently trading at a yield of 10% and has a face value of $1,000? This bond still has exactly 5 years to maturity. This bond pays semi-annual coupon at an annual rate of 8% (i.e., each coupon is 4%). Show how you...
1. What is the YTM on a 4-year bond that pays $50 semiannually and has a current price of $1,087.52? Assume the face value is $1,000 and that there is exactly six months before the first interest payment. 2. A 7-year, 8% coupon bond pays interest semi-annually. The bond has a face value of $1,000. What is the price of this bond if the yield to maturity is 4.0%? 3. Find the price of a 15-year zero-coupon bond when the...
What is the yield to maturity (YTM) of a zero coupon bond with a face value of $1,000, current price of $920 and maturity of 3.5 years? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis. (Allow two decimals in the percentage but do not enter the % sign.)
The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 4.99% 5.79% 5.99% 6.03% What is the price per $100 face value of a four-year, zero-coupon, risk-free bond? The price per $100 face value of the four-year, zero-coupon, risk-free bond is $ . (Round to the nearest cent.) The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM - 5.54% 4.99% 5.54% 5.97% 6.06% What is the risk-free interest rate for a...