Yield to maturity (YTM) and Yield to Call (YTC)
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B7. (Yield to maturity) Coca-Cola has a zero-coupon bond that will pay $1,000 at maturity in five years. Today the bond is selling for $790.09. What is the YTM?
B8. (Yield to maturity) J.C. Penney has a zero-coupon bond that will pay $1,000 at maturity in 25 years. Today the bond is selling for $98.24. What is its YTM?
B9. (Yield to call) Samsung has a bond that cannot be called today but can be called in four years at a call price of $1,080. The bond has a remaining maturity of 16 years, has a coupon rate of 14%, and is currently selling for $1,107.67. What is the bond's YTC?
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Solution Summary
Calculates Yield to maturity (YTM) and Yield to Call (YTC).
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B7. (Yield to maturity) Coca-Cola has a zero-coupon bond that will pay $1,000 at maturity in five years. Today the bond is selling for $790.09. What is the YTM?
Current Price= $790.09
Par Value ( payment at maturity)= $1,000.00
Years to maturity= 5 years
This is a zero coupon bond and there is no other paymnt
YTM= 4.82% =($1,000./ $790.09) ^ (1/5) -1
Answer: YTM= 4.82% 4.82%
B8. (Yield to maturity) J.C. Penney has a zero-coupon bond that will pay $1,000 at maturity in 25 years. Today the bond is ...
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