EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 12PROB
Summary Introduction
Bond has a face value of $1,000 currently trading at $1,022. The bond has a coupon rate of 5.5% paid semi-annually with 5 years left to maturity.
Yield to maturity (YTM) of a bond is the required
YTM calculation is a trial and error process, however, we can calculate YTM using a financial calculator as follows:
INT = PMT = coupon amount
FV = M = maturity value
PV = Price of the bond (input as a negative value)
N = number of periods
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Carrie’s Clothes, Inc. has a five-year bond outstanding that pays $60 annually. The face value of each bond is $1,000, and the bond sells for $890.
a. What is the bond’s coupon rate?b. What is the current yield?c. What is the yield to maturity?
Puzzle's bonds have 15 years remaining to maturity. Interest is paid semiannually, they have a $1,000 par
value, the coupon interest rate is 12 %, and the yield to maturity is 9.5%. What is the bond's current
market price?
Carrie's clothes, has a five year bond oustanding that pay $60 annually. The face value of each bond is $1,000, and the bond sells for $890.
a. what is the bond's coupon rate?
b. what is the current yield?
c. what is the yield to maturity?
Knowledge Booster
Similar questions
- Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?arrow_forwardOriole, Inc., has bonds outstanding that will mature in eight years. The bonds have a face value of $1,000. These bonds pay interest semiannually and have a coupon rate of 4.6 percent. If the bonds are currently selling at $883.92, what is the yield to maturity that an investor who buys them today can expect to earn? Yield to maturity? What is the effective annual yield?arrow_forwardChannel Marker Ships (CMS) has a 14-year callable bond with a $1,000 face value and a call value, or redemption price equal to $1,070. The coupon rate of interest is 7 percent, which is paid semiannually. Currently, the bonds is selling for $886. (a) What is the bond's yield to maturity? (b) If the bond can be called in six years, what is its yield to call?arrow_forward
- BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest rate for similar bonds is currently 6 percent. Assuming annual payments, what is the value of the bond? Knight, Inc., has issued a three-year bond that pays a coupon rate of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond? Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond? Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.875 percent. If these bonds have a market price of $981.13, what yield to maturity can she expect to earn? Rudy Sandberg wants to invest in four-year bonds that are currently priced at $868.43. These bonds have a coupon rate of 6 percent and make…arrow_forwardA company's bond with a face value of $1,000 currently sells for $1,056.17. The bond matures in 8 years. The discount rate for the bond is 9%. What is the coupon rate of the bond if coupons are paid semiannually?arrow_forwardMadsen Motors’s bonds have 23 years remaining to maturity. Interestis paid annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yieldto maturity is 11%. What is the bond’s current market price?arrow_forward
- 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?arrow_forwardTracer Manufacturers issued a 10-year bond six years ago. The bond’s maturity value is $1,000, and its coupon interest rate is 6 percent. Interest is paid semiannually. The bond matures in four years. If investors require a return equal to 5 percent to invest in similar bonds, what is the current market value of Tracer’s bond?arrow_forwardA corporate bond has 20 years to maturity, a face value of $1,000, a coupon rate of 5% and pays interest semiannually. The annual market interest rate for similar bonds is 3%. What is the value of the bond?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning