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?
Q: A boat purchased for $25,000 depreciates exponentially. After one year, the car is valued at…
A: Purchased Price $ 25,000.00 Present Value $ 20,000.00 Time Period 1
Q: Are US Treasury bonds truly risk free?
A: United state treasury bonds are reflective of all such treasury securities which are protected…
Q: a. Calculate the total book value of Meyer's common stock. b. What is the book value per share of…
A: Cumulative Preferred Stock: A preference stock that benefits a stockholder by providing the previous…
Q: Jackson pays $2200 Mortgage Payment, $400 Property tax, $250 Maintenance fees, $100 Heating, $200…
A: GDS or Gross Debt Service is a metrics used by lender to assess the proportion of housing debt that…
Q: What is the expected annual capital gain yield for Orange Corp stock, based on the Constant Dividend…
A: Dividend in one year (D1) = $5.97 Annual growth rate (g) = 0.1024 or 10.24% Required rate of return…
Q: Suppose the current price of the bond is $95, the YTM is 4%, and the duration of the bond is 9. If…
A: Initial price of bond is $95 YTM is 4% Duration of bond is 9 YTM decrease from 4% to 3.9% To Find:…
Q: A crucial factor in the financial decisions of a company, including the evaluation of capital…
A: CAPM and Beta: The CAPM uses the risk-free rate, the market risk premium and the Beta to arrive at…
Q: Jacqueline purchased a machine for $25,000 for his company. He paid 5.00% of this amount as a down…
A: We know that if any down payment is made in the beginning then such an amount will be reduce from…
Q: 3. Suppose a high schools graduate earns $40,000 per year while a college graduate makes $80,000.…
A: Earning of school graduate is $40,000 Earning of college graduate is $80,000 Cost of college per…
Q: Under the gold standard, when annual goods production outstrips the annual production of gold the…
A: Under gold standard, a country's money was linked to the amount of gold that the country had.…
Q: ed to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 12…
A: Yield to maturity is rate of return realized when bond is held till maturity of the bond and it is…
Q: This is a two state economy with two securities. Calculate the risk-free rate Security S Security T…
A: Expected rate of return is the profit or loss on the investor that is assumed to be anticipated by…
Q: ABC Company reported in 2021 sales of P15,000,000, an asset turnover ratio of 3.0, and a rate of…
A: Asset turnover ratio = Sales/Average total assets Return on average assets = Net income/Average…
Q: Drake Corporation is reviewing an investment proposal. The initial cost is $105,100. Estimates of…
A: Payback period is the time taken to recover initial investment. Payback period =Initial…
Q: Colgate-Palmolive Company has just paid an annual dividend of $0.91. Analysts are predicting an…
A: As per the given information: Annual -dividend paid = $0.91Growth rate in earnings over the next…
Q: Two debts, the first of $1900 due three months ago and the second of $1600 borrowed two years ago…
A: Let us calculate the FV, one year from now of the first debt worth $1900 due 3 months ago.FV = PV x…
Q: 7) EmKay, Inc. is considering an investment in a new production equipment to boost its revenue. For…
A: A loan is a contract between two parties where one receives an amount of money from another in…
Q: A young couple wishes to accumulate $35,000 at the end of four years so that they may make a down…
A: Given: Particulars Amount Future value (FV) 35000 Years (NPER) 4 Interest rate (rate) 6%
Q: Assume that in the market for reserves, the discount rate is 8% and the federal funds rate is 4.5%.…
A: Federal Reserve System the central banking system of USA. It is not the federal government part, but…
Q: Bertrand is a worker in Canada with a continuous income stream at the rate of 650e dollars per year.…
A: The concept of the time value of money states that money has more value today because of its ability…
Q: 2)Pebbles & Stone Enterprise currently sells on credit only and does not offer any discounts. In an…
A: The PV analysis is used to find out the profitability of a project. It uses the concept of the time…
Q: The MM irrelevance capital structure theory proved that a firm’s value is unaffected by its capital…
A: The MM irrelevance capital structure theory states that a firm’s valuation is unaffected by its…
Q: A $6,000 bond had a coupon rate of 5.75% with interest paid semi-annually. Bianc purchased this bond…
A: Price of bond is the present value of coupon payment and present value of par value of bond taken on…
Q: The management of River Corporation is considering the purchase of a new machine costing $380,000.…
A: Average rate of return = (Average annual net income / Average Investment)
Q: BC Corporation has a weighted average cost of capital of 16%. What is its value if it will provide…
A: Earnings here are the dividends to the investors. Dividend Discount Model (DDM) is used to value a…
Q: 1.) Accounting measures of performance Consider an asset with the following cash flows: Cash flows…
A: Book Rate of Return is calculated as the ratio of the book income of the firm to the book asset.…
Q: Much concern has been noted on declining housing prices recently brought about by the increase in…
A: Interest rate: The amount of investment in the economy is influenced by the interest rate. Greater…
Q: Bombardier Inc has common stock trading at a price of $15, and a market capitalization of $8…
A: The weighted average cost of capital is the cost of capital after consideration of weights of…
Q: ConEdison Utility Company has four-year bonds outstanding that pay a coupon rate of 6.6% and make…
A: Yield to maturity of the company will be reflective of the required rate of return for investor in…
Q: A Gateway Inc. has an issue of preferred stock that pays $3.40 dividend every year in perpetuity. If…
A: Annual dividend (D) = $3.40 Current price (P0) = $91 Required return (r) = ? Required return is…
Q: At the end of every month you invest $100 into the stock market for the next 48 years. Assuming the…
A: Monthly investment (m) = $100 Monthly rate of return (r) = 0.00666666666666667 (i.e. 0.08 / 12)…
Q: You are preparing to produce some goods for sale. You will sell them in one year and you will incur…
A: To calculate the selling price after 1 year we will use the time value of money formula as follows:…
Q: Share repurchase proposal: Currently, the firm has available capital (cash and net income) of…
A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…
Q: A firm wants to reduce its cash conversion cycle sharply. Which of the following actions should it…
A: Cash conversion cycle is an important metric used in finance. Essentially this metric determines the…
Q: What is the most we should pay for a bond with a par value of $1000, coupon rate of 9.6% paid…
A: A bond is a tradeable debt instrument that gives the bearer the right to earn interest in the form…
Q: At the end of 2020 and the beginning of 2021, coupon rates on long-term T-notes and T-bonds were…
A: T notes and T bonds are the government secured investment wherein the fixed rate of return is…
Q: After four challenging yet fruitful years, you just graduated from college. Your parents gave you…
A: Future Value: The future value is the value of annuity or the sum lump amount after a certain period…
Q: What is one of the functions of the financial markets and how does financial institutions play a…
A: Financial markets Financial markets refer to that place where trading is done of all types of…
Q: Economy will improve vastly next year, and that many freight customers will gradually switch from…
A:
Q: The down payment or equity needed for this investment is $60,000 (outflow) Cash Flow $15,000 5,000…
A: Investment $ 60,000.00 Saving Rate 1.50% Loan Rate 8%
Q: Brockman Corporation's earnings per share were $3.50 last year, and its growth rate during the prior…
A: A=P(1+r/100)^nwhereA=future valueP=present valuer=rate of interestn=time period.
Q: How much is the exact interest earned if P4,500 is lent at 12% interest for 125 days?
A: Investment = P4,500 Interest rate = 0.12 or 12% Number of days = 125 days Interest earned = ? In…
Q: 9.5 In a private values model, argue that it is a weakly dominant strategy for a bidder to bid his…
A: A weakly dominated approach is one that produces the same or worse results as an alternative…
Q: After four challenging yet fruitful years, you just graduated from college. Your parents gave you…
A: Future Value: The future value is the value of annuity or the sum lump amount after a certain period…
Q: A writer sells 100 call options with strike $46 for $0.94 each and deposits these premiums in a…
A: A writer receives the premium for the call option sold. He receives $0.94 per option.The amount he…
Q: An efficient portfolio is one that: Select one: a. maximises return for a given level of…
A: Efficient Portfolio is the Portfolio or group of stocks invested which maximises the expected rate…
Q: 1) You are planning your dream vacation to see Komodo National Park in Indonesia. You figure you…
A:
Q: Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days…
A: Information Provided: Balance = $600 Rate = 18% Payment = $550 Term = 10/30 days
Q: How can a developer create value over and above their project cost when attempting to obtain…
A: Project cost refers to the total funds that are required for the monetary cover and the…
Q: There are two accounts. One pays simple interest and the other pays compound interest. Both accounts…
A: In case of simple interest Future value = Present value×[1+Periodic interest rate×time ]
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
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 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?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 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:
- What is the market price of a bond if the face value is $1,000 and the yield to maturity is 6.7% ? The bond has a 6.15% coupon rate and matures in 12 years. The bond pays interest semiannually. Please express answer as $X.XX or XX.XX and use rounding guideline included in "Course Information" module. Do not round until the final result.Assume coupons are paid annually. Here are the prices of three bonds with 10 year maturities. Assume face value is $100. Bond Coupon 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 duration of each bond? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.Calculating and interpreting current yield and yield to maturity Find the current yield of a 10%, 25-year bond that's currently priced in the market at $1,250. Now, use a financial calculator to find the yield to maturity on this bond (use annual compounding). What's the current yield and yield to maturity on this bond if it trades at $1,000? If it's priced at $750? The par value of the bond is $1,000. Round your answers to two decimal places. Do not round intermediate calculations. Quote Current Yield Yield to Maturity 10%, 25 yr., $1,250 % % 10%, 25 yr., $1,000 % % 10%, 25 yr., $750 % %
- Consider a bond with a 4% annual coupon and a face value of $1000. Complete the following table. Years to Maturity Yield to Maturity Current Price 2 3% $ 2 4% $ 3 4% $ 5 3% $ 5 7% (Round to two decimal places as needed.) Based on the table, what relationships do you observe between years to maturity, yield to maturity, and the current price? (Select all that apply.) A. Price and years to maturity are negatively related (for any given yield to maturity). B. Price and yield to maturity are negatively related (for any given years to maturity). C. Price and yield to maturity are positively related (for any given years to maturity). D. Whenever yield to maturity equals the annual coupon rate, the bond's price is equal to its face value. E. Price and years to maturity are positively related (for any given yield to maturity). F. Whenever yield to maturity equals the annual coupon rate, the bond's price is equal to its face value divided by the number of years to maturity. G. When yield to…Find the duration of a bond with a settlement date of May 27, 2025, and maturity date November 15, 2036. The coupon rate of the bond is 8.0%, and the bond pays coupons semiannually. The bond is selling at a bond- equivalent yield to maturity of 8.0%. Use Spreadsheet 16.3 Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Macaulay duration Modified durationA bond with a face value of $1,000 has 16 years until maturity, has a coupon rate of 7.8%, and sells for $1,071. a. What is the current yield on the bond? (Enter your answer as a percent rounded to 2 decimal places.) Current yield % b. What is the yield to maturity if interest is paid once a year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) Yield to maturity % c. What is the yield to maturity if interest is paid semiannually? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) Yield to maturity %
- Find the current yield of a 9%, 30-year bond that's currently priced in the market at $1,050. Now, use a financial calculator to find the yield to maturity on this bond (use annual compounding). What's the current yield and yield to maturity on this bond if it trades at $1,000? If it's priced at $950? The par value of the bond is $1,000. Round your answers to two decimal places. Do not round intermediate calculations. Quote Current Yield Yield to Maturity 9%, 30 yr., $1,050 % % 9%, 30 yr., $1,000 % % 9%, 30 yr., $950 % %A 25-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 8%. a. What is the bond's yield to maturity if the bond is selling for $1,050? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to maturity b. What is the bond's yield to maturity if the bond is selling for $1,000? Yield to maturity c. What is the bond's yield to maturity if the bond is selling for $1,250? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to maturityAssume coupons are paid annually. Here are the prices of three bonds with 10-year maturities. Assume face value is $100. Bond Coupon (8) 4 8 Price (1) 81.55 98.31 133.52 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 (%) 2 4 8 YTM 7.05% % %