Explore BrainMass
Share

# Bond questions

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

The Timberlake-Jackson Wardrobe Co. has 10 percent coupon bonds on the market with 20 years left to maturity. The bonds make annual payments. If the bond currently sells for \$996.6, the YTM is percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.)

Merton Enterprises has bonds on the market making annual payments, with 16 years to maturity, and selling for \$1,056. At this price, the bonds yield 6.4 percent. The coupon rate on the Merton's bonds is percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.)

Brittany Co. issued 14-year bonds one year ago at a coupon rate of 9.25 percent. The bonds make semiannual payments. If the YTM on these bonds is 8 percent, the current bond price is \$ . (Round your answer to 2 decimal places. Omit the "\$" sign in your response.)

Night Hawk Co. issued 16-year bonds 2 years ago at a coupon rate of 7.5 percent. The bonds make semiannual payments. If these bonds currently sell for 96 percent of par value, the YTM is percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.)

Young Corporation has bonds on the market with 20 years to maturity, a YTM of 8 percent, and a current price of \$958. The bonds make semiannual payments. The coupon rate on these bonds must be percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.)
If Treasury bills are currently paying 5 percent and the inflation rate is 2.5 percent, the approximate real rate of interest is percent. The exact real rate is percent. (Input answers as percents rounded to 2 decimal places, without the percent sign.)

Locate the Treasury bond in Figure 6.3 maturing in May 2016.

This is a bond. Its current yield is percent, and yield to maturity is percent. The bid-ask spread is . (Input answers as percents rounded to 2 decimal places, without the percent sign.)

(here is the info in the Figure6.3)

#### Solution Summary

The solution explains some bond questions relating to calculation of YTM percent, coupon rate, current bond price and treasury bond yield

\$2.19

## Callaghan Motors' bonds have 10 years remaining to maturity.

I am having a really hard time fully understanding how to workout these questions. I would like your assistance, so I may understand how to workout other assignments.

7-1 Bond valuation Callaghan Motors' bonds have 10 years remaining to maturity. Interest is paid annually; they have a \$1,000 par value; the coupon interest rate is 8 percent; and the yield to maturity is 9 percent. What is the bond's current market price?

7-2 Current yield and yield to maturity A bond has a \$1,000 par value, 10 years to maturity,
a 7 percent annual coupon, and sells for \$985.
a. What is its current yield?
b. What is its yield to maturity (YTM)?
c. Assume that the yield to maturity remains constant for the next 3 years. What willthe price be 3 years from today?

7-3 Bond valuation Nungesser Corporation's outstanding bonds have a \$1,000 par value, a 9 percent semiannual coupon, 8 years to maturity, and an 8.5 percent YTM. What is the bond's price?

7-8 Yield to call Six years ago, the Singleton Company issued 20-year bonds with a 14 percent annual coupon rate at their \$1,000 par value. The bonds had a 9 percent call premium, with 5 years of call protection. Today, Singleton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Explain why the investor should or should not be happy that Singleton called them.

7-10 Current yield, capital gains yield, and yield to maturity Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 8 percent annual coupon rate and were issued 1 year ago at their par value of \$1,000, but due to changes in interest rates, the bond's market price has fallen to \$901.40. The capital gains yield last year was _9.86 percent.
a. What is the yield to maturity?
b. For the coming year, what is the expected current yield and the expected capital gains yield?
c. Will the actual realized yields be equal to the expected yields if interest rates change? If not, how will they differ?

View Full Posting Details