eBook Dynamic Systems has an outstanding bond that has a $1,000 par value and a 10 percent coupon rate. Interest is paid semiannually. The bond has 13 years remaining until matures. Today the going interest rate is 12 percent, and it is expected to remain at this level for many years in the future. a. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. % b. Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. %

eBook Dynamic Systems has an outstanding bond that has a $1,000 par value and a 10 percent coupon rate. Interest is paid semiannually. The bond has 13 years remaining until matures. Today the going interest rate is 12 percent, and it is expected to remain at this level for many years in the future. a. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. % b. Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

eBook Dynamic Systems has an outstanding bond that has a $1,000 par value and an 8 percent coupon rate. Interest is paid semiannually. The bond has 10 years remaining until it matures. Today the going interest rate is 10 percent, and it is expected to remain at this level for many years in the future. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. _____ % Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. _____ %
Dynamic Systems has an outstanding bond that has a $1,000 par value and an 11 percent coupon rate. Interest is paid semiannually. The bond has 13 years remaining until it matures. Today the going interest rate is 12 percent, and it is expected to remain at this level for many years in the future. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. _______% Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. _______%
What is the value of a bond that has a par value of $1,000, a coupon of $120 (annually), and matures in 10 years? Assume a required rate of return of .0702. Instruction: Type your answer in dollars, and round to two decimal places.
For a company, you plan to buy the following bond: Time to maturity, 6 years; coupon rate, 8%; Coupon payment, annual; Market interest rate, 8%; Face value, $1,000. Using Excel, calculate the duration of the bond. Using Excel, calculate the accumulated value of invested payment(or receipt) when you find market interest rate a year later is now 8%, 9%, and 7%, respectively. Using Excel, calculate geometric average rate of return (or realized compound return).
The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 17.6 percent. Assume interest payments are made semiannually. How would your answer change if the required rate of return is 11.4 percent? (Round final answer to nearest dollar amount.) Present value $Type your answer here
Enterprise, Inc. bonds have a 9 percent annual coupon rate. The interest is paid semiannually and the bond mature in eight years. Their par value is $1,000. If the market’s required yield to maturity on a comparable-risk bond is 8 percent, what is the value of the bond? What is its value if the interest is paid annually? How to calculate this using mathematical calculation with formulas in finance?
Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.01% when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $100 face value? b. What is the internal rate of return of your investment? Note: Assume annual compounding. The cash flow at time 1-3 is $ (Round to the nearest cent. Enter a cash outflow as a negative number.) (Round to the nearest cent. Enter a cash outflow as a negative number.) The cash outflow at time 0 is $ The total cash flow at time 4 (after the fourth coupon) is $ negative number.) b. What is the internal rate of return of your investment? (Round to the nearest cent. Enter a cash outflow as a
Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have a 10% annual coupon payment, and their current price is $1,170. The bonds may be called in 5 years at 109% of face value (Call price = $1,090). a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % b. What is the yield to call if they are called in 5 years? Do not round intermediate calculations. Round your answer to two decimal places. % c. Which yield might investors expect to earn on these bonds? Why? I. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. II. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. III. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. IV. Investors would expect the bonds to be called and to earn the YTC because…
Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 2% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 10%. a. What will be your cash flow at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be your real return? c. What will be your nominal return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Suppose you purchase a ten-year bond with 12% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 10.64% when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $100 face value? b. What is the internal rate of return of your investment? Note: Assume annual compounding. a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flow at time 1-3 is $ (Round to the nearest cent. Enter a cash outflow as a negative number.) The cash outflow at time 0 is $ number.) (Round to the nearest cent. Enter a cash outflow as a negative The total cash flow at time 4 (after the fourth coupon) is $. (Round to the nearest cent. Enter a cash outflow as a negative number.) b. What is the internal rate of return of your investment? The internal rate of return of your investment is %. (Round to two decimal…
What is the price of the seasoned Treasury Bond that has a 5 percent coupon rate paid semi-annually and has 9 years till maturity and a 1000 dollar face value? Assume that the current market interest rates for the 9-year Treasury bonds is currently 8 percent with semi-annual compounding. Show your work (show the correct equation(s) with the correct numbers in the equation). Provide the correct answer.
Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has three years until maturity. Required: a. Find the bond's price today and six months from now after the next coupon is paid. b. What is the total (6-month) rate of return on the bond? Complete this question by entering your answers in the tabs below. Required A Required B Find the bond's price today and six months from now after the next coupon is paid. Note: Round your answers to 2 decimal places. Current price Price after six months $ $ 1,052.42 1,044.52