McCue Inc.'s bonds currently sell for $1,250. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC? (Subtract the YTC from the YTM.)

a. 2.11%
b. 2.32%
c. 2.55%
d. 2.80%
e. 3.09%

Solution Summary

The solution explains how to calculate the difference between this bond's YTM and its YTC

A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 14 percent coupon, pays interest semiannually, and can be called in 5 years at a price of $1,100. What is the bond'sYTMandYTC?
YTMYTC
a. 6.05%; 9.00%
b. 10.00%; 10.26%
c. 10.06%; 12.00%
d. 11.26%; 14.00%
e. 11.26%; 10.00%

Please help with the following problem:
Johnson Inc.'s bonds currently sell for $1,250. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume

What are the YTCandYTM for a 20-year, 8% Semiannual coupon bond selling for $1,225, which can be called in 5 years for $1,085? What is the effective YTC? Would you expect to earn YTM or YTC on this bond and why? Also, show the formula and entries on a financial calculator.

Company considering bonds for sale that have a $1000 par value and will mature in 16 years. The coupon rate on the bonds is 5% paid annually and are currently selling for $987 each. The bonds are called protected for the next 4 years and after this period they are callable at 105.
1) What is the YTM on these bonds?
2) If the

1. Luther Industries has just issued a callable (at 102) ten-year, 8% coupon bond with semi-annual coupon payments. The bond can be called at 102 in three years or anytime thereafter on a coupon payment date. It has a current price of 99.
a. What is the Yield to Maturity (YTM) on this bond?
b. What is the Yield to Call (YT

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 Y

Please calculate the attached problems and show all work:
1. Bond PV 1a
A coupon bond promises annual interest payments based on a face value of $1,000 and a 9.00% coupon rate. The bond matures in 22 years. If the appropriate discount rate is 7.85%, what is the value of the bond?
2. Bond YTM 1a
A coupon bond with annual

I need the sequence of keystrokes on a TI BA II Plus to solve the following practice problem. Also, briefly walk me through the solution.
You plan to purchase a bond that was issued on January 1, 2000. It is now January 1, 2005. The bond has an 8% annual coupon rate and a 25-year original maturity. The bond has 5-year call

A. What is the yield to maturity (YTM) for a 10% Treasury bond with a price of 130 and semi-annual payments that matures in 25 years?
b. What is the yield to call (YTC) on the bond in part a. that is callable at par ($100) in 10 years?