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    HOMEWORK CHAPTER 7

    1- Use the WSJ listing to answer the following questions:
    Maturity Ask
    Rate Mo/Yr Bid Asked Yield
    6.300 April 25 108:07 108:08 -----
    4.625 April 17 90:17 90:18 -----
    10.55 April 17 138:00 138:01 -----

    For these bonds,
    a. What is the asked price for each bond?
    b. What is the YTM using the asked price?

    2- If the following partial listing appeared in the WSJ:

    Company Coupon Maturity Last Price Last Yield

    AT&T 11.75 April 18, 2028 -------- 8.8
    Rouse 9.85 April 18, 2023 -------- 10.5

    For each bond:
    a. Find the price of the bond.
    b. If the AT&T bond could be called in 5 years at a call premium of $1060, what is the yield to call on the bond?
    c. Should you compute the YTM or YTC on this bond? Why?
    d. Without a computation, if the Rouse bond had a call provision, would that bond be called? Explain briefly.
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    https://brainmass.com/business/finance/finance-maturity-bonds-77537

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    1-a. What is the asked price for each bond?
    The face value of the bond is usually $1000, then the asked price is computed by
    Asked Price
    108:08 =1000*108% + 8/32 = $ 1,080.25
    90:18 =1000*90% + 18/32 = $ 900.56
    138:01 =1000*138% + 1/32 = $ 1,380.03

    b. What is the YTM using the asked price?
    For the first bond, input in the calculator:
    FV = 1000
    N = 25
    PMT = 1000*6.3% = 63
    PV = - 1080.25
    Then compute YTM rate (I/Y) = 5.7%

    For the ...

    Solution Summary

    There are several questions here regarding YTM and bonds

    $2.19

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