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 Summary

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

... Solution describes the steps to calculate yield to maturity(YTM) and yield to call (YTC) for a callable coupon paying bond. ... The current bond price is $1000 ...

... we need the original issuing price to calculate YTC: PV ... Then you can hold the bond to maturity. ... solution explains the steps on a financial calculator, but also ...

Calculate Yield to maturity (YTM) and Yield to Call (YTC... We multiply by 2 as the rate calculated is for ...Calculates Yield to maturity (YTM) and Yield to Call (YTC...

... Three finance problems on calculating dividend yield, annual ...Calculate the dividend 1 year from now, using the ...Yield to maturity can be calculated using Excel ...

... The solution explains how to calculate the yield to maturity, yield ... use the PV function to calculate the price... Semi Annual Coupon bond Semi annual interest 50 ...

... how to achieve the answer to each problem with a BA II calculator. ... The price of the bond today is $1,075 ... What are the bond's yield to maturity and yield to call ...

... the bonds in 8 years at a call price of $1,060. What are the YTM and YTC on Rourke's bonds? ...Yield to maturity can be calculated using Excel worksheet function ...

... Using the annuity calculator: ... What is the Yield to Maturity (YTM) on this bond? ... To calculate the YTM use the RATE function Semi annual interest 40 Maturity 20 ...