Night Hawk Co. issued 15-year bonds two years ago at a coupon rate of 9.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?
App Store Co. issued 15-year bonds one year ago at a coupon rate of 6.1 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.3 percent, what is the current bond price?
Year Cash Flow
The following problems have been solved using a HP 10BII financial calculator. If you are using another financial calculator, you may have to adjust the inputs accordingly.
Q1. Bond yield Night Hawk Co.
N = 13 x 2 = 26 (number of semiannual payments left to maturity)
PV = 105% of face value $1000 = -$1050 (current price put in as a negative number)
PMT = 9.4% of $1000 / 2 = 94/2 = $47 (9.4% of face value ...
The expert examines bond yields, bond prices and discounted cash flows.