A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a call price of $1,020. The bond currently sells at a yield to maturity of 7.50% (3.75 % per half-year). a. What is the yield to call annually? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to call b. What is the yield to call annually if the call price is only $970? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to call % c. What is the yield to call annually if the call price is $1,020, but the bond can be called in two years instead of five years? (Negative amounts should be shown with a minus sign. Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to call %

A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a call price of $1,020. The bond currently sells at a yield to maturity of 7.50% (3.75 % per half-year). a. What is the yield to call annually? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to call b. What is the yield to call annually if the call price is only $970? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to call % c. What is the yield to call annually if the call price is $1,020, but the bond can be called in two years instead of five years? (Negative amounts should be shown with a minus sign. Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to call %

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 17P: Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4...

See similar textbooks

Similar questions

Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may be called in 4 years at a call price of 1,060. The bond sells for 1,100. (Assume that the bond has just been issued.) a. What is the bonds yield to maturity? b. What is the bonds current yield? c. What is the bonds capital gain or loss yield? d. What is the bonds yield to call?
Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond’s current yield?
Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of 1,000, and has a yield to maturity equal to 9.6%. One bond, Bond C, pays an annual coupon of 10%; the other bond, Bond Z, is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 9.6% over the next 4 years, what will be the price of each of the bonds at the following time periods? Fill in the following table:
Current Yield for Annual Payments Heath Food Corporations bonds have 7 years remaining to maturity. The bonds have a face value of 1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield?
Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds?
A 30-year maturity, 8.3% coupon bond paying coupons semiannually is callable in five years at a call price of $1,115. The bond currently sells at a yield to maturity of 7.3% (3.65% per half-year). Required: a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % b. What is the yield to call if the call price is only $1,065? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % c. What is the yield to call if the call price is $1,115 but the bond can be called in two years instead of five years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A 30-year maturity, 8.3% coupon bond paying coupons semiannually is callable in five years at a call price of $1,115. The bond currently sells at a yield to maturity of 7.3% (3.65% per half-year). Required: a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the yield to call if the call price is only $1,065? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is the yield to call if the call price is $1,115 but the bond can be called in two years instead of five years? (Do not round
A 20-year maturity, 7.6% coupon bond paying coupons semiannually is callable in seven years at a call price of $1,170. The bond currently sells at a yield to maturity of 6.6% (3.30% per half-year). Required: a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call b. What is the yield to call if the call price is only $1,120? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % Yield to call % c. What is the yield to call if the call price is $1,170 but the bond can be called in four years instead of seven years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) %
A two-year bond with par value $1,000 making annual coupon payments of $105 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) Yield to maturity % Interest Rate Realized YTM 8.5% % 10.5% % 12.5% % 4 21 b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.5%, (b) 10.5%, (c) 12.5% ? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
A two-year bond with par value $1,000 making annual coupon payments of $102 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) Yield to maturity 10.2 % b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.2%, (b) 10.2%, (c) 12.2%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Interest Rate Realized YTM 8.2% % 10.2% 12.2% 10.20% %
Give typing answer with explanation and conclusion A 3.90 percent coupon municipal bond has 11 years left to maturity and has a price quote of 97.45. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.) a. Compute the bond’s current yield. b. Compute the yield to maturity. c. Compute the taxable equivalent yield (for an investor in the 36 percent marginal tax bracket) d. Compute the yield to call.