The Wellington Corporation issued a new series of bonds on January 1, 1991! The bonds were sold at par (Rs.1.000) have a 12 percent coupon, and mature in 30 years, on December 31, 2020. Coupon payments are made semiannually (on June 30 and December 31). a) b) d) e) What was the yield to maturity (YTM) of Wellington's bonds on January 1, 1991? What was the price of the bond on January 1, 1996, five year later, assuming that the level of interest rates had fallen to 10 percent? Find the current yield and capital gains yield on the bond on January 1, 1996, given the price as determined in (b) above. What was the price of the bond on July 1, 2014, assuming the level of interest rates had risen up to 14 percent? What were the current yield and capital gain yield on July 1, 2014?

The Wellington Corporation issued a new series of bonds on January 1, 1991! The bonds were sold at par (Rs.1.000) have a 12 percent coupon, and mature in 30 years, on December 31, 2020. Coupon payments are made semiannually (on June 30 and December 31). a) b) d) e) What was the yield to maturity (YTM) of Wellington's bonds on January 1, 1991? What was the price of the bond on January 1, 1996, five year later, assuming that the level of interest rates had fallen to 10 percent? Find the current yield and capital gains yield on the bond on January 1, 1996, given the price as determined in (b) above. What was the price of the bond on July 1, 2014, assuming the level of interest rates had risen up to 14 percent? What were the current yield and capital gain yield on July 1, 2014?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 13P

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