Six years ago, you purchased a callable bond with fifteen years until maturity. The bond has...
Six years ago, you purchased a callable bond with fifteen years until maturity. The bond has a $1,000 par value and pays interest semiannually. The bond has 9% coupon rate and a 6% yield to maturity. The bond offers three years of call protection and a 2% call premium.
a. How much did you pay for the bond at the time of purchase?
b. Today, the firm called the bond. What is the bond’s yield to call?
c. Did the firm make the right decision to call the bond? Why or why not?
Homework Answers
1.
=PV(6%/2,2*15,-1000*9%/2,-1000)=1294.00662024205
2.
=RATE(6*2,9%*1000/2,-PV(6%/2,2*15,-1000*9%/2,-1000),1000*(1+2%))*2=3.7777535979978%
3.
Yes as yield to call is less than yield to maturity
Add Answer to:
Six years ago, you purchased a callable bond with fifteen years
until maturity. The bond has...
A callable bond has 15 years to maturity and can be called in 5 years. The...
A callable bond has 15 years to maturity and can be called in 5 years. The bond’s coupon rate is 12% with semi-annual coupon payments. The par value is $1000. If the bond is called, the call price will be $1100. The bond is currently selling for $1055.35 What is the difference between its yield-to-call and yield-to-maturity?
A bond has a $1,000 par value, nine years to maturity, and pays a coupon of...
A bond has a $1,000 par value, nine years to maturity, and pays a coupon of 3.75% per year, semiannually. The bond can be called in four years at $1,075. If the bond’s yield to call is 3.58% per year, what is its annual yield to maturity?
1. A bond with two years remaining until maturity offers a 3% coupon rate with interest...
1. A bond with two years remaining until maturity offers a 3% coupon rate with interest paid annually. At a market discount rate of 4%, find the price of this bond per 1000 of par value. 2. A bond offers an annual coupon rate of 5%, with interest paid semiannually. The bond matures in seven years. At a market discount rate of 3%, find the price of this bond per 1000 of par value. 3. A zero-coupon bond matures in...
One year ago, you purchased a $1,000 face value bond at a yield to maturity of...
One year ago, you purchased a $1,000 face value bond at a yield to maturity of 9.45 percent. The bond has a 9 percent coupon and pays interest semiannually. When you purchased the bond, it had 12 years left until maturity. You are selling the bond today when the yield to maturity is 8.20 percent. What is your realized yield on this bond? a. 16.35 percent b. 18.11 percent c. 14.54 percent d. 17.60 percent e. 15.27 percent
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
A 25-year maturity, 7.4% coupon bond paying coupons semiannually is callable in six years at a...
A 25-year maturity, 7.4% coupon bond paying coupons semiannually is callable in six years at a call price of $1,180. The bond currently sells at a yield to maturity of 6.4% (3.20% per half-year). a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % b. What is the yield to call if the call price is only $1,130? (Do not round intermediate calculations. Round your answer to...
A 25-year maturity, 8.7% coupon bond paying coupons semiannually is callable in six years at a...
A 25-year maturity, 8.7% coupon bond paying coupons semiannually is callable in six years at a call price of $1,135. The bond currently sells at a yield to maturity of 7.7% (3.85% per half-year). a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % b. What is the yield to call if the call price is only $1,085? (Do not round intermediate calculations. Round your answer...
A 25-year maturity, 9.0% coupon bond paying coupons semiannually is callable in six years at a...
A 25-year maturity, 9.0% coupon bond paying coupons semiannually is callable in six years at a call price of $1,150. The bond currently sells at a yield to maturity of 8.0% (4 00% per half-year) a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to cal b. What is the yield to call if the call price is only $1,100? (Do not round intermediate calculations. Round your answer to...
.. 4 Unanswered A callable bond has 10 years to maturity and 2 years to call....
.. 4 Unanswered A callable bond has 10 years to maturity and 2 years to call. The bond is callable at 105% of par and has a coupon rate of 5%. If the bond is currently priced at $1100, what is the yield to call %? (Convert to a percent, but include only numbers in your response.) Type your response
A 20-year bond with a coupon rate of 8% and par value of $1000 currently has...
A 20-year bond with a coupon rate of 8% and par value of $1000 currently has a yield to maturity of 6%. The bond is callable in 5 years with a call price of $1100. What is the bond’s yield to call? A zero-coupon bond with 10 years remaining until maturity and a par value of $1000 has a yield to maturity of 10%. What is the bond’s price? (Financial calculator please)
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
A 25-year maturity, 9.0% coupon bond paying coupons semiannually is callable in six years at a call price of $1,150. The bond currently sells at a yield to maturity of 8.0% (4 00% per half-year) a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to cal b. What is the yield to call if the call price is only $1,100? (Do not round intermediate calculations. Round your answer to...
.. 4 Unanswered A callable bond has 10 years to maturity and 2 years to call. The bond is callable at 105% of par and has a coupon rate of 5%. If the bond is currently priced at $1100, what is the yield to call %? (Convert to a percent, but include only numbers in your response.) Type your response
Most questions answered within 3 hours.
-
You capture data by having 8 people fill in 30 small dots on a
piece of...
asked 3 hours ago -
What are the z-values such that 70% of the area lies in the
middle of the...
asked 5 hours ago -
You borrow $29,500 to purchase a brand new car. The interest
rate is 6%, and the...
asked 5 hours ago -
The amount of time it takes an asteroid, whose average distance
from the Sun is 4.70...
asked 5 hours ago -
A 0.289 kg mass slides on a frictionless floor with a speed of
1.34 m/s. The...
asked 5 hours ago -
15.A box contains five red balls, three green balls, and two
yellow balls. Suppose you select...
asked 8 hours ago -
Assume you are given the following for Stackelberg industries:
Return on Assets (ROA) = 8%
Debt...
asked 7 hours ago -
an engineer proposes to use mmWave in 5G network to
increase data rate.
What are the...
asked 7 hours ago -
Explain the idea behind using SEMIJOIN in distributed
query processing.
asked 7 hours ago -
why
is context important in selecting and applying guidelines and
principles for interface design?
illustrate your...
asked 7 hours ago -
In a certain board game, a player rolls two fair six-sided dice
until the player rolls...
asked 8 hours ago -
You are going to deposit $3,200 in an account that pays .58
percent interest compounded quarterly....
asked 7 hours ago