Purchase Solution

Interest Rate, YTM, Accrued Interest and Treasury Bond Yield

Not what you're looking for?

Ask Custom Question

See attached file for clarity.

Young Corporation has bonds on the market with 19 years to maturity, a YTM of 6.4 percent, and a current price of $1,519. 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.)

Using Bond Quotes
Suppose the following bond quote for IOU Corporation appears in the financial page of today's newspaper. Assume the bond has a face value of $1,000, and the current date is April 15, 2008. (Input answers as percents rounded to 2 decimal places, without the percent sign.)

Company (Ticker) Coupon Maturity Last Price Last Yield EST Vol (000s)
IOU (IOU) 7.425 Apr 15, 2016 873.1 ?? 1,827

The yield to maturity of the bond is percent.
The current yield is percent.

Nominal and Real Returns
An investment offers a 14.5 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 5.5 percent. Therefore, Bill believes the inflation rate will be percent over the next year. (Input answer as a percent rounded to 2 decimal places, without the percent sign.)

Accrued Interest
You purchase a bond with an invoice price of $1,070. The bond has a coupon rate of 4.6 percent, semiannual coupons and there are 2 months to the next coupon date. The clean price of the bond is $ . (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

In the table, find the Treasury bond that matures in May 2029. Assume that it is currently May 2008. What is the yield to maturity for this bond? (Input answer as a percent rounded to 2 decimal places, without the percent sign.)

Rate Maturity Mo/Yr Bid Asked Chg Ask Yld
?? May 15 106:13 106:17 +2 4.96
8.875 May 29 123:19 123:22 +4 ??
5.375 May 33 ?? ?? +3 6.48

The yield to maturity is percent.

Attachments
Purchase this Solution
Solution Summary

The solution explains the calculation of bond coupon rate, yield, YTM, accrued interest and treasury bond yield

Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Understanding Management

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

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

View More Free Quizzes
Related BrainMass Solutions

  • Simple Bond Question

    calculate the - accrued interest - total cost of acquiring bond - coupon yield - YTM accrued interest is the interest that has accumulated on a bond since the last interest payment up to, but not including, the settlement date.

  • Various Bond Questions

    1) real rate 2) current rate 3) realized rate 4) risk-free rate 5) nominal rate. 1. The difference between the clean and dirty price is the accrued interest.

  • Treasury Bond

    56787 Treasury Bond Lester purchases a 30-year Treasury bond today. This bond is selling at par ($1,000) and has a coupon rate and yield to maturity of 7% (the bond pays interest annually).

  • Treasury Bonds and Interest Rate Risk

    324363 Which of the following Treasury bonds will have the largest amount of interest rate risk (price risk) and why? Which of the following Treasury bonds will have the largest amount of interest rate risk (price risk) and why? A.

  • Price of Bonds using Excel

    Date= January 1, 1986 Level of interest rate= 10% Coupon rate= 10% Therefore the bond will sell at par = $1,000.00 Find the current yield and capital gains yield on the bond in 1986, given the price just determined.

  • Treasury Bonds and the Largest Interest Rate Risk

    324353 Treasury bonds and the largest interest rate risk Which of the following Treasury Bonds will have the largest amount of interest rate risk (price risk) and why? A. A 7% coupon bond which matures in 12 years. B.

  • Change in price, yield due to change in interest rates

    The solution explains how the coupon, price and yield on a treasury bond will change when market interest rate changes in approximately 89 words.

  • US Treasury Bond Yield

    202333 US Treasury Bond Yield Offering the US government's 9.25% 2016 Treasury Bond for "129.38." a. What is the amount of the coupon interest payment you would receive each year if you bought the bond? (Assume annual payments) b.

  • Bonds valuation and YTM

    Semi annual payment= 4.5% Therefore for 128 days accrued interest=(128/360) X 4.5 %= 1.6% On a face value of $ 1000 accrued interest= $16 Payment made for $ 1000 bond= $ 1060 Accrued interest paid= $ 16 Price of the bond after deducting accrued

View More Related Solutions