Problem 1
Suppose a corporation's bonds have 8 years remaining to maturity. In addition, suppose the bonds have a $1000 face value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 10%. Complete parts (a) and (b) below.
a) Compute the market price of the bonds if interest is paid annually.
b) Compute the market price of the bonds if interest is paid semiannually.

Problem 2
Suppose a corporation's bonds have a current market price of $1400. The bonds have a 13% annual coupon rate, a $1000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 107% of face value. Complete parts (a) through (c) below.
a) Compute the bonds' current yield.
b) Compute the yield to maturity.
c) Find the yield to call, if the bonds are called in 5 years.

Problem 3
A company has a bond issue outstanding that pays $150 annual interest plus $1000 at maturity. The bond has a maturity of 10 years. Compute the value of the bond when the interest rate is 5%, 9%, and 13%. Describe the pattern and the type of risk that may apply.

Solution Preview

Please refer attached file for better clarity of functions in MS Excel.

Problem 1
Suppose a corporation's bonds have 8 years remaining to maturity. In addition, suppose the bonds have
a $1000 face value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 10%. Complete parts (a) and (b) below.

a) Compute the market price of the bonds if interest is paid annually.

Number of periods=NPER=8
Maturity amount=Face Value=FV=$1,000
Coupon amount=PMT=1000*7%=$70
YTM=RATE=10%
Type of payment=TYPE=0 Coupon is paid at the end of period

Current Market price can be found by using PV function in MS Excel.
Current Market Price=PV=($839.95) =PV(E10,E7,E9,E8,E11)
Current Market Price=$839.95

b) Compute the market price of the bonds if interest is paid semiannually.

Number of periods=NPER=8*2=16 Coupon is paid semiannually
Maturity amount=Face Value=FV=$1,000
Coupon amount=PMT=1000*7%/2=$35
YTM=RATE=10%/2=5% Semi annual
Type of payment=TYPE=0 Coupon is paid at the end of period

Current Market price can be found by using PV function in MS Excel.
Current Market Price=PV=($837.43) ...

Solution Summary

There are 3 problems. Solutions to these problems depict the methodology to calculate the bond price, yield to maturity and yield to call.

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 thebond's YTMandYTC?
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%

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 thebonds, and also assume that the yield curve is horizontal, with rat

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.
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1) What is theYTM on these bonds?
2) If the

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Please help with the given problem:
It is now January 1, 2009, and you are considering the purchase of an outstanding RDC bond that was issued on January 1, 2007. Thebond has a 9.5% annual coupon and a 30 year original maturity (it matures in December 31, 2036). There is a 5 year call protection (until December 31, 20011), a

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. Thebond matures in 22 years. If the appropriate discount rate is 7.85%, what is the value of thebond?
2. BondYTM 1a
A coupon bond with annual

(See attached file for full problem description)
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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 Apr

Describe the differences between the yield to maturity (YTM) andthe yield to call (YTC) on a bond.
Why would the return to the investor be different if a bond is called? Why?
What are bond ratings and how do they affect the ability of the firm to raise funds?
Are these ratings similar to the ratings for a country or a com

1) Rourke Motor Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. Thebonds have a par value of $1000 andtheir current market price is $1,130.35. However, Rourke may call thebonds in 8 years at a call price of $1,060. What are theYTMandYTC on Rourke's bonds?
YTM=
YTC=
2)