a) Current Yield = Coupon / Price = 8% x 1000 / 980 = 8.16%
b) YTM can be calculated using I/Y function
N = 4 x 2 = 8, PMT = 40, PV = -980, FV = 1000
=> Compute I/Y = 4.30% (semi-annual)
Annual YTM = 4.30% x 2 = 8.60%
c) After two years, the price of bond = $1000 as coupon rate is equal to YTM.
Future Value of reinvestment of coupon can be calculated using FV.
N = 2 x 2 = 4, PMT = 40, PV = 0, I/Y = 6%/2 = 3% => Compute FV = $167.35
Realized return can be calculated using I/Y function
N = 2, PV = -980, FV = 167.35 + 1000 = 1167.35, PMT = 0
=> Compute I/Y = 9.14%
Bonds of Francesca Corporation with a par value of $1000 sell for $980, mature in four...
Bonds of Francesca Corporation with a par value of $1,000 sell for $930, mature in five years, and have a 8% annual coupon rate paid semiannually. Do not round intermediate calculations. Round your answers to two decimal places. Calculate: current yield. % annually yield to maturity, to the nearest basis point. % annually horizon yield (or realized return) for an investor with a two-year holding period and a reinvestment rate of 7% over the period. At the end of two...
General Electric bonds have a par value of $1,000, sell for $1,070, mature in 6 years, and have a 7% coupon rate paid annually. a. Calculate the current yield and yield to maturity for this bond. b. Calculate the realized compound yield for an investor with a 4-year horizon and a reinvestment rate of 5% over the period. At the end of the 4 years, assume that the coupon bonds will sell at a YTM of 6%. c. Explain why...
2). Bonds of Zello Corporation with a par value of $1,000 sell for $1,080, mature in 18 years, and have a 7% annual coupon rate paid annually, what is the yield to maturity? what is the current yield? what is the capital gains (loss) yield?
Bonds of Zello Corporation with a par value of $1,000 sell for $960, mature in five years, and have a 7% annual coupon rate paid semiannually. Compute the current yield and YTM. Hint: In what situation a bond can have current yield greater than YTM?
Bonds of Zello Corporation with a par value of $1,000 sell for $1,080, mature in 18 years, and have a 7% annual coupon rate paid annually, what is the yield to maturity? what is the current yield? what is the capital gains (loss) yield? please show step by step solution.for full credit, Not excel workings. Thank you!!!
1) Consider AlliedSignal Corporation's $1000 par value, 9.875% coupon bonds that mature in 6 years. Assume that the coupon on these bonds is paid annually. a) Find the value of the bonds today to an investor whose required rate of return is 7%. b) What would be the value if the coupon was paid semi-annually?
(Bond valuation) Calculate the value of a bond that will mature in 17 years and has a $1,000 face value. The annual coupon interest rate is 11 percent, and the investor's required rate of return is 14 percent The value of the bond is S828.27 (Round to the nearest cent. (Bond valuation) Calculate the value of a bond that will mature in 14 years and has a $1.000 face value. The annual coupon interest rate is 5 percent, and the...
2 years ago, you acquired a 10-year 0% coupon, $1000 face value bond at a YTM of 12%. Today, you sold this bond at a YTM of 8%. Calculate your annualized Horizon Yield [HY] Assuming sem-annual compounding: answer 28.7842% With a financial calculator, how do you find this? Bonds of RCY Corporation with a face value of $1000 sells for $960, mature in 5 years, and have a 7% coupon rate paid semiannually. Calculate the investor's RCY by assuming the...
5a FYI bonds have a par value of $1,000. The bonds pay an 8% annual coupon and will mature in 11 years. i) Calculate the price if the yield to maturity on the bonds is 7%, 8% and 9%, respectively. ii) What is the current yield on these bonds if the YTM on the bonds is 7%, 8% and 9%, respectively. Hint, you can only calculate current yield after you have determined the intrinsic value (price) of the bonds. iii)...
Lloyd Corporation's annual pay, $1000 par value bonds, which mature in 12 years, are callable in 7 years from today at $1020, the annual coupon payment is $120. They sell at a price of $1400. a) What is the bond's Yield to Maturity? b) What is the bond's Current Yield? c) What is the bond's Yield to Call? d) What is the bond's Coupon Rate? e) What is the bond's Selling Price if the payments are semiannual? right answers will...