# Financial Management: keystrokes on a TI BA II to solve a YTM, YTC bond problem

Not what you're looking for?

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 protection until December 31, 2004. After that the bond can be called at 107.5. Interest rates have declined and the bond now sells for 115.5% of par. You must find the YTM and YTC.

1. Calculate the YTM in Year 2005 for the bond.

Calculate the YTC.

2. Which return would it earn?

Why?

3. Assuming that the bond is being sold at a discount, would the YTM or YTC be more relevant? Why?

##### Purchase this Solution

##### Solution Summary

The solution explains the steps on a financial calculator, but also walks through the problem with explanation and answers for better understanding.

##### Solution Preview

1. Calculate the YTM in Year 2005 for the bond. Calculate the YTC.

Assuming the coupon is paid annually.

Calculate YTM:

PV= -115.5 N=25-5=20 FV=100 PMT=8 - > CPT I/Y= 6.58%

YTM < coupon rate

It is sold at premium.

Calculate YTC:

I'm not sure whether the question is right itself. Because we need the original issuing price to ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

##### Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

##### Learning Lean

This quiz will help you understand the basic concepts of Lean.

##### Motivation

This tests some key elements of major motivation theories.

##### Operations Management

This quiz tests a student's knowledge about Operations Management