30. ABC Inc.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)? 6.63% 6.98% 7.35% a. b. C. نه لن d. 7.74% 8.12%

30. ABC Inc.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)? 6.63% 6.98% 7.35% a. b. C. نه لن d. 7.74% 8.12%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: one-year futures price on a particular stock - index portfolio is 1,124.91, the stock index…

A: The future contracts are to be settled in the future but contracts are done for future delivery at…

Q: On January 1, Carla Vista Inc. issued $7000000, 9% bonds for $7455000. The market rate of interest…

A: Bonds issued at premium.If the issue price of bond is greater than face value of bond, then bond is…

Q: Annual Life Project Investment Income Project 22A $17,220 6 years 23A 21,000 9 years 24A 15,700 7…

A: Internal rate of return is the capital budgeting metric of analyzing projects which is profitable to…

Q: for 60 There is a choice to buy a car worth $28,000 with 100% financing at 4.99% or lease at $450…

A: Loans are money lended from others and these carry interest and that is paid by monthly payments and…

Q: Alpha Industries is considering a project with an initial cost of $8.2 million. The project will…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: Which of the following does NOT issue securities? A GNMA B FRB C FHLB D FFCB

A: In this question, we are required to determine the body which does not issue security.

Q: What is the coupon payment for the bond in the table? Assume semi-annual payments. Bond Coupon…

A: Compound = Semiannually = 2Yield = r = 4.9 / 2 = 2.45%Price of Bond = pv = $921.72Time = t = 28 * 2…

Q: A coupon bond that pays interest semiannually has par value of $1,000 , matures 8 years, and has a…

A: Bond price will be the aggregate of present value of all coupon payments and present value of face…

Q: Required: a. Suppose Baa-rated bonds currently yield 7.0 %, while Aa-rated bonds yield 5.0%. Now…

A: Confidence index at first = Yield Aa rated bonds/ Yield Baa rated bonds.= 5/7 = 0.7143

Q: Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its…

A: The NPV is one of the most commonly used methods of capital budgeting which determines the…

Q: If a person knowingly makes a FALSE statement concerning any fact or thing material to a claim that…

A: In this question, we are required to identify the statute that addresses false claims.

Q: A bond sells for $1000 and has a coupon rate of 9.04%. What is the bond's yield?

A: Par value or face value of the bond = $1,000Current price of the bond = $1,000Coupon rate =…

Q: Part C Two mutually exclusive projects have projected cash flows as follows: Requirement: 1. II.…

A: IRR and NPV are important capital budgeting tools.NPV or net present value is the sum of present…

Q: Eric invested $2,000 at the beginning of every 6 months in an RRSP for 11 years. For the first 9…

A: The FV of an investment refers to the combined value of the cash flows of the investment at a…

Q: Cantrell Cash Flow: Year 5, Cash Flow $12,000 Year 4, Cash Flow $12,000 Year 3, Cash Flow $11,000…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: (Evaluating liquidity) The Allen Marble Company has a target current ratio of 2.0 but has…

A: The objective of the question is to find out how much additional short-term funding Allen Marble…

Q: You borrow $675,000 to buy a home using a 30-year mortgage with an interest rate of 3.675 percent…

A: We take loans to buy expensive items like a car or a house which otherwise we cannot afford. The…

Q: 5. In the following case the mixed end of period cash flow stream has an annuity embedded within it.…

A: The present value (PV) represents the current worth of a future cash amount or stream. Selecting the…

Q: Your company has arranged a revolving credit agreement for up to $82 million at an interest rate of…

A: Credit arrangement: $82 millionInterest rate: 1.51% per quarterCompensating balance: 4%Interest rate…

Q: One year ago, your company purchased a machine used in manufacturing for $105,000. You have learned…

A: Net present value NPV is the difference between the present value of the future cash flows and the…

Q: Lacy has a $41,500.00 student loan when she graduates on May 4, and the prime rate is set at 5.5%.…

A: A student loan refers to a loan that is extended only to students to finance their education fees.…

Q: During the start-up of a business, business for the first few months of operations. is often needed…

A: In this question, we are required to fill in the blank.

Q: Determine the present value of $110,000 to be received at the end of each of 4 years, using an…

A: Present Value (PV) is a financial concept that pertains to the valuation of future cash flows in…

Q: Required information [The following information applies to the questions displayed below) On January…

A: Here,Details of Part c:First Payment in $75,000Second Payment is $112,500Third Payment is $150,000

Q: You are going to invest in Asset J and Asset S. Asset J has an expected return of 10.8 percent and a…

Q: Suppose that a bond makes annual coupon payments at a 7% coupon rate, has 10 years until maturity,…

A: Here, ParticularsValuesFace value of the bond (FV) $ 1,000.00Coupon rate7%Term till maturity…

Q: 6. You are given the following information for ABC Inc.: (1) The risk-free rate is 5%. (2) The rate…

A: Current price of stock is the price which can be paid for purchase of the stock. It is also called…

Q: A pension fund has an average duration of its liabilities equal to 15 years. The fund is looking at…

A: The duration of the bond refers to the weighted average of the time for which the PV of the cash…

Q: You find the following corporate bond quotes. To calculate the number of years until maturity,…

A: Coupon rate can be found using the coupon payments on an annual basis and the face value. The coupon…

Q: 3 years ago, Heather won some money in the lottery and put it in a bank account that earns 8%…

A: Time = t = 3 YearsInterest Rate = r = 8%Future Value = fv = $100

Q: 3. Assume that the market is in equilibrium and that stock betas can be estimated with historical…

A: Variables in the question:Let us denote return on United Fund (UF) =XLet us denote return on…

Q: Let us assume that Paulie will receive a one-time payment of $56,000 seven years from now. Assuming…

A: Present Value is the current price of future value which will be received in near future at some…

Q: Use the following information for the next 2 questions Roger buys a house costing $300,000. He puts…

A: Loan amortization refers to the equal and periodic repayment of loan including the interest. The…

Q: As an investor, would you want to buy a bond at a discount or premium? Explain the reasoning behind…

A: In this question, we are required to determine whether investors prefer to buy bond at discount or…

Q: Friendly's Quick Loans, Incorporated, offers you $7.50 today but you must repay $9.85 when you get…

A: We need to use effective annual return (EAR) formula below.EAR =( 1 +Periodic interest rate)number…

Q: Lakelord Company is considering two mutually exclusive projects, A and B. Project A costs $86784 and…

A: NPV can be calculated by following function in excel=NPV(rate,value1,[value2],…) + Initial…

Q: Flowers must raise $227 million for its future expansion. To do so, Jasmine expects to issue new…

A: Companies raise money through issues of stock but there are cost related to issues of shares like…

Q: You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: QUESTION 1 XYZ is evaluating a project that would require an initial investment of $72,300.00 today.…

A: IRR means Internal rate of return.It is the rate of return at which present value of cash inflows is…

Q: Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon…

A: The weighted average cost of financing can be referred to as the cost of financing when different…

Q: The Campbell Company is considering adding a robotic paint sprayer to its production line. The…

A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Q: Fama's Llamas has a weighted average cost of capital of 9.4 percent. The company's cost of equity is…

A: WACC means weighted average cost of capital.It is calculated as follows:-WACC =…

Q: ← Consider the following timeline detailing a stream of cash flows: Date $5000 OA. $24,852 OB.…

A: Present value is an estimate of the present value of future cash values that may be received at a…

Q: The appropriate discount rate for the following cash flows is 14 percent compounded quarterly. Year…

A: YearCash flowPV factor @14%PV of cash…

Q: Your insurance agent is trying to sell you an annuity that costs $80,000 today. By buying this…

A: Present value is an estimate of the present value of future cash values that may be received at a…

Q: According to the Gordon dividend model, which of the following variables would not affect a stock's…

A: Gordon's Dividend model is also known as Dividend discount model. It is generally used to calculate…

Q: The $1,000 face value bonds of Galaxies International have coupon of 6.45 percent an pay interest…

A: Yield to maturity rate of return realized on the bond when held till maturity of the bond period and…

Q: You are considering an investment in a Third World bank account that pays a nominal annual rate of…

A: Monthly investment, PMT $ 5,000.00Type BeginningInterest rate, rate18%Compounding period…

Q: KT Enterprises is considering undertaking a new project. Based upon the analysis of firms with…

A: equity cost of capital will be calculated by following formula:- rE = rU + [ * (rU-rD)]whererE=…

Q: For 9 years, Janet saved $500 at the beginning of every month in a fund that earned 4.5% compounded…

A: We need to use use future value of annuity due( payment due at beginning of period) formula to…

Question

30. ABC Inc.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105 annual
coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield
to call (YTC)?
a.
6.63%
b.
C.
d.
e.
6.98%
7.35%
7.74%
8.12%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define of YTM

VIEW

Step 2: Calculation of YTM

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Dyl Inc's bonds currently sell for $1,180 and have a par value of $1,000. They pay a $65 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to maturity (YTM)? A. 4.79% B. 3.69% C. 4.65% D. 5.08% E. 4.36%
Perry Inc.'s bonds currently sell for $1,070. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield? Select the correct answer. ○ a. 7.94% b. 9.54% ○ c. 8.74% ○ d. 8.34% O e. 9.14%
9. Messenger, Inc. bonds have a 4% coupon rate with semiannual coupon payments and a $1,000 par value. The bonds have 11 years until maturity, and sell for $925. What is the current yield for Messenger's bonds? A. 2.16% B. 3.45% C. 4.32% D. 5.52%
Orca Industries' 5.75% bonds currently sell for $1,370.54. They mature in 24 years and have a par value of $1,000. If these bonds pay interest semiannually, what is the yield to maturity? 3.78% 3.95% 3.01% 3.67% 3.46%
The bonds of Octopus Industries have a face value of $1,000 and currently sell for $ 650.37. They make semi-annual payments of $82 and mature in 18 years. What is the yield to maturity? 21.08% 23.12% 22.10 % 23.88% 25.40%
LotsaDough's bonds have a 20-year maturity, 8% coupon (paid annually), $1000 par (face) value, and are priced at $952.68. What is LotsaDough's cost of debt (ignoring taxes)? Group of answer choices 7.0% 7.5% 8.0% 8.5%
Sadik Inc.'s bonds currently sell for $1,330 and have a par value of $1,000. They pay an $110 annual coupon and have a 10-year maturity, but they can be called in 4 years at $1,130. What is their yield to call (YTC)? 5.23% b. 8.27% c. 6.43% d. 7.19% e. 4.77%
Dyl Inc.'s bonds currently sell for $810 and have a par value of $1,000. They pay a $65 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to maturity (YTM)? Answer choices 8.83% 10.78% 7.33% 7.60% 9.28%
Zanobia Co.'s bonds currently sell for $1,150. They have a 8% annual coupon rate (but paid semiannually) and a 30-year maturity, and are callable in 10 years at $1,100. What is the yield to call of the bonds? Select one: O a. 6.64% O b. 4.34% O c. 4.57% O d. 4.12% e. 3.92% 4
Assume that Bunch Inc. has an issue of 18 -year $1,000 par value bonds that pay 7% interest, annually. Further assume that today's required rate of return on these bonds is 5%. How much would these bonds sell for today? Round off to the nearest $1. Select one:$1,201.32$1,233.79$1,032.56$1,134.88
MCQ: Legacy Inc. recently issued bonds that mature in 10 years. They have a par value of $1,000 and annual coupon of 6%. The current market interest rate is 8.5%. Assume that the bonds can be recalled at end of year 5 at $1,250. What will be the price of bonds? Select one: a. 833.82 b. 1067.75 c. 1130.95 d. 835.97 e. 582.73
A $1,000 per value bond with a 5.8% coupon and semi-annual interest payments has 25 years to maturity. If the bonds are currently trading for $1,122.75, what is the cost of debt for the firm? 4.94% 5.12% 4.93% 4.50% 6.02%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS