A semi-annual corporate bond selling for R915.16, with a coupon of 6% has a YTM of 8%. The bond matures in 10 years, but can be called in 8 years at a call price of R1080 (this is a premium of 8%). What is this bond's Yield to Call (YTC )? a.3.6% b.4.1% c.6.56% d.7.2% e.8.2%
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A semi-annual corporate bond selling for R915.16, with a coupon of 6% has a YTM of 8%.
The bond matures in 10 years, but can be called in 8 years at a call price of R1080 (this is a premium of 8%).
What is this bond's Yield to Call (YTC )?
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- 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?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?
- A bond with face value P10,000 has a semiannual coupon rate of 6%. With a time to maturity of 3 years, the bond is sold for P10,500. What is the current yield of the buyer? Choices: a. 5.71% b. 5.55% c. 6% d. 5%4) A coupon bond pays this amount every 6 months; $ 30.00 bgs for the number of payments/year; 2 The bond also pays at maturity the par (face) value; $ 1,000.00 Number of years until maturity 15 The required return of holders of this bond is; 8.00% bgs a) What is the PV of the CFs, or what would be the fair price to purchase this bond? b) If the required return of holders of this bond is; 6.00% bgs What is the PV of the CFs, or what would be the fair price to purchase this bond? c) If the required return of holders of this bond is; 4.00% What is the PV of the CFs, or what would be the fair price to purchase this bond? to purchase this bond? bgs d) If the previous bond sells for; $ (976.00) What must be the yield to maturity for this bond (aka IRR) ? (to…2. A bond pays semi-annual coupons with c(2) = .085. Assume the face value equals $10,000 and matures in 4 years. The YTM of the bond is given as i(2) = .07. Construct the amortization table for this bond. 3. Calculate the price of the bond in problem #2 above at time t=1/2.
- 4. a. A perpetual bond has Tk. 1,200 face value and provides a 10.5% coupon. If themarket price of the bond is Tk. 1,050, what is its yield to maturity? 03b. A zero-coupon, Tk. 1000 face-value bond is currently selling for Tk. 208 andmatures in exactly 10 years. What is the required rate of return on this bond? 04c. ABC Company has outstanding, an 10 percent, four year, Tk. 1,000 par valuebond on which interest is paid monthly. If the market rate of return is 15 percent,what is the intrinsic value of the bond?The market price of a three-year 4% annual-coupon bond is 946.54. If the YTM remains unchanged after you purchase the bond, what is the expected return if you hold the bond for one year? 6% 5.56% 4.14%What are the Modified Duration and Macaulay Duration of the following bond? Coupon Rate = 8% (Semi-annually paid) YTM = 9% Maturity = 2 Years Par Value = 1,000 (Hint: this question is similar to Example 1 and Example 2 on slides) ModD = 1.886 and MacD = 1.805 ModD = 1.784 and MacD = 1.954 ModD = 1.954 and MacD = 1.784 ModD = 1.805 and MacD = 1.886
- Consider a bond with a face value of $1,000 that sells for an initial price of $700. It will pay no coupons for the first nine years and will then pay 11% coupons for the remaining 29 years. Choose an equation showing the relationship between the price of the bond, the coupon (in dollars), and the yield to maturity. O A. B. O C. O D. 700 = 700 = 700 = 700 = 110 110 9 (1+i)⁹ (1+i)⁹+1 + 110 + i) ⁹ + 1 (1 + 1,000 (1+i) 29-9 1,000 (1 + i) 9 +29 + +...+ 110 (1+i) 9+2 + 110 (1 + i)9+29-1 110 + (1 + i) ⁹ + 110 (1+i)9 +29 9+29-1 + 110 (1 + i)9 +29 + 1,000 (1+i) 9+29A bond makes annual coupon payments of R75. The bond matures in four years, has a par value of R1,000, and sells for R975.30. What is the bond’s yield to maturity (YTM) A. 9,25% B. 8,25% C. 8,52% D. 7,52%Suppose a thirty-year bond with a $10,000 face value pays a 0.0% annual coupon (at the end of the year), has 1 year left to maturity, and has a discount rate of 0.0%. Ceteris paribus, it follows that the current market price of the bond should be Select one: a. more $10,000. Ob. $10,000 c. less than $10,000. d. The market price of the bond cannot be determined from the information given.
