Answered: Yield to Maturity and Current Yield

Business

Finance

Yield to Maturity and Current Yield

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 13P: Yield to Maturity and Current Yield You just purchased a bond that matures in 5 years. The bond has...

See similar textbooks

Related questions

Q: Calculate the value of a bond that matures in

A: Bond: It is a debt instrument issued by the firm to raise debt capital and is valued by discounting…

Q: Yield to Maturity and Yield to Call Arnot International's bonds have a current market price of…

A: First three subparts will be answered as per our policies.1)Coupon = 10% of Face value = 10% of 1000…

Q: Yield to maturity The Salem Company bond currently sells for $1,174.88, has a coupon interest rate…

A: Yield of bond shows how much return one generates from investing in it. When market price of a bond…

Q: A 25-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate…

A: Given, Number of years (Nper) = 25 Future value (FV) = $1,000 Coupon rate = 9.6% or 0.096

Q: The following data are available for a bond Face value 7 1,000 Coupon Rate 16% Years to Maturity…

A: Face Value = 1,000 Coupon rate = 16% Years to maturity = 6 Redemption value = 1,000 Yield to…

Q: (Bondholders' expected rate of return) You own a bond that has a par value of $1000 and matures in…

A: In the given question we need to compute the bondholder's expected rate of return.

Q: Excel Answer Please! An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond…

A: Bonds are debts instruments that are issued by entities to raise funds and meet their capital…

Q: YIELD TO MATURITY AND YIELD TO CALL Kaufman Enterprises has bond outstanding with a $1,000 face…

A: yield to maturity can be calculated using rate formula in excel =RATE (nper, pmt, pv, [fv], [type],…

Q: Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in…

A: A financial instrument that has a fixed income and also helps a company to raise funds for business…

Q: yield to maturity

A: Introduction: Yield to maturity is a total return that is earned by the investor from a bond if the…

Q: An 8% semiannual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current…

A: In the given problem we are required to calculate the bond's price and YTM of the bond. First we…

Q: The Brownstone Corporation's bonds have 6 years remaining to maturity. Interest is paid annually,…

A: yield to maturity formula: ytm=coupon+face value-pricenface value+price2 where, n=years to maturity

Q: The yield to maturity of a $1,000 bond with a 7.0% coupon rate, semiannual coupons, and two years…

A: Price of bond is present value of all future cash flows discounted at rate of return. It can be…

Q: yield to maturity and future price A bond has a 1000 par value, 10 years to maturity, and a 7%…

A: Face Value = 1000 Price = 985 N = 10 Coupon = Coupon Rate * Face Value = 7%*1000 = 70

Q: find the present value of a 2 year bond that pays a semi annual coupon has a coupon rate of 6…

A: Bond is a long-term debt instrument that is used by organizations to raise debt funds from public.…

Q: A bond that matures in 6 years sells for $950. The bond has a face value of $1,000 and a 5.5% annual…

A: Current yield is the rate of annual income that can be earned by the bondholder.

Q: You have just purchased an outstanding 15-year bond with a par value of $1,000 for$1,145.68. Its…

A: Working note:

Q: Yield to matunty. a. What is the yield of the following bond if interest (coupon) is paid quarterly?…

A: Question asked here is Yield to maturity of $ 5000 bond paying 8% coupon quarterly for 20 years and…

Q: Consider an 5.0% coupon bond selling for $960.90 with three years until maturity making annual…

A: Computation:

Q: Consider a coupon bond that has a par value of $900 and a coupon rate of 10%. The bond is currently…

A: Given:

Q: YIELD TO MATURITY AND FUTURE PRICE A bond has a $1,000 par value, 12 years to maturity, and an 8%…

A: Annual Compounding Yield to maturity Years 12 coupon amount (PMT) (1000*8%) 80 Face…

Q: YIELD TO MATURITY A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 11%…

A: Bond is debt-instrument that is used by entities to raise debt funds from public-at-large. Bonds pay…

Q: A bond has a 12% coupon rate with semiannual coupons and matures in 13 years. The bond has a $1,000…

A: Price of the bond is present value of cashflows the bond Yield to maturity is return to the…

Q: What is the bond's yield to maturity?

A: A bond's yield to maturity (YTM) is the internal rate of return required for the present value of…

Q: Given a 30-year par $1.000 bond with coupon payments of $40 every 6 months. (a) Let the yield to…

A: Here, Par Value of Bond is $1,000 Coupon Payment is $40 in every six month Maturity Period is 30…

Q: Calculate the yield to maturity (i.e., YTM) for the following bond. The bond matures in 28 years,…

A: Data given: Par value of the bond = $1000 N= 28 years Coupon rate = 8.0% with semi-annual payments…

Q: A corporate bond matures in 14 years. The bond has an 8% semiannual coupon and a par value of…

A: Calculate the yield to maturity as follows:MS-Excel --> Formulas --> Financials --> Rate

Q: Assume coupons are paid annually. Here are the prices of three bonds with 10 year maturities. Assume…

Q: O MATURITY AND FUTURE PRICE A bond has a $1,000 par value, 12 years to matu- rity, and an…

A: Yield to maturity of bond is the discount rate which is realized if bond is held to maturity of…

Q: Yield to Maturity and Current Yield You just purchased a bond that matures in 15 years. The bond…

A: The current yield of the bond is calculated by determining the relation between the annual coupon…

Q: Consider a 30-year Bond with $1,000 face value, which offers 10% annual coupon, paid once a year.…

A: Given: Years = 30 Face value = $1,000 Coupon rate = 10% Yield to maturity (YTM) = 6% or 7%

Q: What is the Yield to Maturity (YTM )for a $1,000 par value bond selling on the market priced at…

A: Given information: Par value : $1,000 Market price : $1,120 Maturity period : 6 years Annual coupon…

Q: (Bond valuation) Calculate the value of a bond that matures in 13 years and has a $1,000 par…

A: Maturity period = p = 13 years Coupon rate = 0.13 or 13% Face value or maturity value = Q = $1,000…

Q: An a face value yield to is paid 8% Corporate bond with OF F100,000 matures in 5 years the the…

A: Face value (F) = P 100000 Coupon (C) = 8% of F = P 8000 r = 7% n = 5 years

Q: You just purchased a bond that matures in 15 years. The bond has a face value of $1,000 and an 8%…

A: The formula to calculate current yield is given belowCurrent yield = Annual Coupon/Price of the…

Question

100%

Yield to Maturity and Current Yield

You just purchased a bond that matures in 12 years. The bond has a face value of $1,000 and has an 7% annual coupon. The bond has a current yield of 5.74%. What is the bond's yield to maturity? Round your answer to two decimal places.

_________%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of 1,000, and has a yield to maturity equal to 9.6%. One bond, Bond C, pays an annual coupon of 10%; the other bond, Bond Z, is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 9.6% over the next 4 years, what will be the price of each of the bonds at the following time periods? Fill in the following table:
Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may be called in 4 years at a call price of 1,060. The bond sells for 1,100. (Assume that the bond has just been issued.) a. What is the bonds yield to maturity? b. What is the bonds current yield? c. What is the bonds capital gain or loss yield? d. What is the bonds yield to call?
Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond’s current yield?
A bond with 18 years to maturity has an annual interest payment of $35. If the bond sells for its par value, what are the bond's current yield and yield to maturity? Round your answers to two decimal places. CY:______% YTM:_____%
Consider a bond with a current value of $928.01. It is a 10-year, $1,000 bond, coupons paid semi-annually, and has a 7% coupon rate. a. The bond's yield to maturity (YTM) is: b. What will be its value (per $1,000 of face) if its YTM changes to 10%? Question content area bottom Part 1 a. The YTM is enter your response here%. (Round to two decimal places.) b. Value (per $1,000 of face): $enter your response here. (Round to the nearest cent.)
Yield to Maturity and Current Yield You just purchased a bond that matures in 15 years. The bond has a face value of $1,000 and an 8% annual coupon. The bond has a current yield of 8.37%. What is the bond's yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % Please advise on this question
Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities. Assume face value is $100. Bond Coupon (%) 2 Price (%) 48 80.57 97.19 134.92 a. What is the yield to maturity of each bond? b. What is the duration of each bond? Complete this question by entering your answers in the tabs below. Required A Required B What is the yield to maturity of each bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Bond Coupon YTM (%) 2 4 6.00 % 7.42% 8 7.01 %
Assume coupons are paid annually. Here are the prices of three bonds with 10 year maturities. Assume face value is $100. a. What is the yield to maturity of each bond? Bond coupon YTM 6% ? % 8% ? % 10% ? % b. what is the duration of each bond? Bond coupon Duration 6% ? years 8% ? years 10% ? years
Give typing answer with explanation and conclusion A Treasury bond that matures in 10 years has a yield of 7%. A 10-year corporate bond has a yield of 10%. Assume that the liquidity premium on the corporate bond is 0.8%. What is the default risk premium on the corporate bond? Round your answer to one decimal place.
Consider a bond that has a price of $1046.76, a coupon rate of 8.8%, a yield to maturity of 8.1%, a face value of $1000, and 10 years to maturity. What is the current yield? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer to 2 DECIMAL PLACES. Number %
What is the price of a bond with a coupon rate of 7%, payable semi-annually, a face value of $1000, 7 years to maturity, and a yield to maturity of 6.8%? Enter your response below. Enter your answer to 2 DECIMAL PLACES. Number