Explore BrainMass

Explore BrainMass

    Yield to maturity (YTM) and Yield to Call (YTC)

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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?

    © BrainMass Inc. brainmass.com November 24, 2021, 2:42 pm ad1c9bdddf
    https://brainmass.com/business/bond-valuation/272310

    Solution Preview

    Please see attached file.

    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 ...

    Solution Summary

    Calculates Yield to maturity (YTM) and Yield to Call (YTC).

    $2.49

    ADVERTISEMENT