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Calculating PV, current yield, beta and YTM as per details

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1. Determine how much you would be willing to pay for an Annuity Due that has the following characteristics: (a) PMT: $5,500, (b) RATE: 8%, and (c) NPER: 15.

2. What is the current yield on a bond that has the following characteristics: (a) Price: $1,055, (b) Coupon Rate: 5%, (c) YTM: 4.6%, and (d) NPER: 22.

3. What is the Beta for XYZ Company, given the following information: (a) Expected Return on Company XYZ's Stock: 9%, (b) Expected Return on the Risk Free Asset: 3%, and (c) Expected Rate of Return on the Market: 9.5%.

4. Calculate the YTM on a bond with the following characteristics: (a) Price: $884, (b) Coupon: $50.00, and (c) NPER: 24.

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Solution Summary

There are 4 basic problems. Solutions to these problems depict the methodology to determine PV, YTM, current yield and beta. PV and YTM are calculated by using the built-in functions in MS Excel.

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1. Determine how much you would be willing to pay for an Annuity Due that has the following characteristics: (a) PMT: $5,500, (b) RATE: 8%, and (c) NPER: 15. 

PMT=$5,500
RATE=8%
NPER=15
Type=1 annuity due
FV=0
Price can be found by using PV function in MS ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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