Purchase Solution

Calculating YTM and price of a bond

Not what you're looking for?

Ask Custom Question

The Pennington Corporation issued a new series of bonds on January 1, 1987. The bonds were sold at par ($1,000), had a 12% coupon, and matured in 30 years on December 31, 2016. Coupon payments are made semiannually.
(on June 30 and December 31)

a. What was the YTM on the date the bonds were issued?
b. What was the price of the bonds on January 1, 1992 (5 years later) assuming that interest rates had fallen to 10%?

Purchase this Solution

Solution Summary

The solution describes the steps to calculate YTM and price of a bond in the given case.

Solution Preview

a. What was the YTM on the date the bonds were issued?
Since bonds were issued at par, it means that YTM was equal to coupon rate i.e. ...

Solution provided by:
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution

Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.


This tests some key elements of major motivation theories.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.