Yield to maturity calculations for bonds
Not what you're looking for?
What is the yield to maturity on a 10 year, 9 percent annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or premium tell you about the relationship between rd and the bond's coupon rate?
What is the current yield, the capital gains yield, and the total return in each case in the preceding question?
If the bond in part is callable in five years at a call price equal to $1,090.00, what is the yield to call (YTC) on the bond if its market value is $887.00? What is the YTC on the same bond if its current market price is $1,134.20?
What is interest rate price risk? Which bond has more interest rate reinvestment rate risk, assuming a 10 year investment horizon?
Purchase this Solution
Solution Summary
Calculating yield to maturity for bonds.
Solution Preview
See attached file which includes a graph.
f. (1.) What is the yield to maturity on a 10-year, 9 percent annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or at a premium tell you about the relationship between rd and the bond's coupon rate? What is the yield-to-maturity of the bond?
Use the Rate function to solve the problem.
Years to Mat: 10
Coupon rate: 9%
Annual Pmt: $90.00 Going rate, r =YTM: 10.91% See RATE function at right.
Current price: $887.00
Par value = FV: $1,000.00
(2.) What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.)
Current and Capital Gains Yields
The current yield is the annual ...
Purchase this Solution
Free BrainMass Quizzes
Motivation
This tests some key elements of major motivation theories.
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.
Introduction to Finance
This quiz test introductory finance topics.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.