Homework Help


Yield to Call, Yield to Maturity, and Market Rates related questions

  • 1Yield to Call, Yield to Maturity, and Market Rates

    Absalom Motors's 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 30 years are callable 5 years from now at a price of $1,050. The bonds sellat a price of $1,353.54, and the yield curve is flat. Assuming that interest rates in the economy are expected to remain at their current level, what is the bestestimate of the nominal interest rate on new bonds?

  • 2nominal annual yield to maturity and their annual yield to call

    Spring Corporation's bonds have a maturity of 30 years with a $12,250 face value and a 5.5% semi-annual coupon. They are callable in 15 years at $11,750 and currentlysell at a price of $12,000.a) What are their nominal annual yield to maturity and their annual yield to call?b) What return should investors expect to earn on these bonds?c) What is the most reliable market indicator for bonds – ratings or yield spreads? Please choose one.

  • 3nominal annual yield to maturity and their annual yield to call

    Spring Corporation's bonds have a maturity of 30 years with a $12,250 face value and a 5.5% semi-annual coupon. They are callable in 15 years at $11,750 and currentlysell at a price of $12,000.a) What are their nominal annual yield to maturity and their annual yield to call?b) What return should investors expect to earn on these bonds?c) What is the most reliable market indicator for bonds – ratings or yield spreads? Please choose one.

  • 4Which bond has a current yield that exceeds the yield to maturity?

    Determine the current market prices of the following $1,000 bonds if the comparable rate is 10% and answer the following questions.XY 5.25% (interest paid annually) for 20 yearsAB 14% (interest paid annually) for 20 yearsWhich bond has a current yield that exceeds the yield to maturity?

  • 5Yield to Call and Realized Rates of Return

    Seven years ago, Goodwynn &Wolf Incorporated sold a 20 year bond issue with a 14% annual coupon rate and a 9% call premium. Today, G&W called thebonds. The bonds originally were sold at their face value of $1000. Compute the realized rate of return for investors who purchased the bonds when they were issued andwho surrender them today in exchange for the call price.

  • 6Current yield and Yield to Maturity....

    Brown Enterprises? bonds currently sell for $1,025. They have a 9-year maturity, an annual coupon of $80, and a par value of $1,000. What is their yield tomaturity?a. 6.87%b. 7.03%c. 7.21%d. 7.45%e. 7.61%Brown Enterprises? bonds currently sell for $1,025. They have a 9-year maturity, an annual coupon of $80, and a par value of $1,000. What is their current yield?a. 7.80%b. 7.90%c. 9.00%d. 9.10%e. 9.20%I am a little confused as to what the difference is and how to work these out. I have done the first problem and come up with an answer of 7.61%. The second confusesme. What is the difference and how to work the 2nd is the main problem I am having. Any help would be appreciated. Thank you.

  • 7Yield to maturity (YTM) is the calculation utilizing the current price of the investment, the coupon cash flows and the par amount at maturity

    Yield to maturity (YTM) is the calculation utilizing the current price of the investment, the coupon cash flows and the par amount at maturity. However, the mathematics of the YTM calculation is virtually wrong or incorrect in the real world for coupon bonds greater than zero (non-zero coupon bonds). Which statement below best describes this incorrect math formula? (Points: 4) Coupon payments every 6 months might be small and therefore, cannot be reinvested in an efficient manner. Interest rates at the time of the coupon payments will not be identical to YTM rate calculated. The dynamics of the real world markets and the supply and demand for borrowing and lending almost predict that rates will be different on the coupon dates than the YTM calculation assumes. This is the best math formula we have; and universally accepted. All of the above statements are correct.

  • 8Yeild to call, Yeild to Maturity, and Market rates

    Absalom Motors's 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 30 years are callable 5 years from now at a price of $1,050. The bonds sellat a price of $1,353.54, and the yield curve is flat. Assuming that interest rates in the economy are expected to remain at their current level, what is the bestestimate of the nominal interest rate on new bonds?

  • 9Yield to maturity

    The yield to maturity on a bond is the rate of return that equates the present value of the bond's future cash flow with the bond's face value, market value,liquidation value or book value?

  • 10what the yield to maturity

    will's bond have 12yrs remaining to maturity. interest is paid annually the bonds have a 1000 par value and the coupon interest rate is 10% . the bond sells at a priceof 850 what is their yield to maturity?

  • 11yield to maturity

    A bond with a coupon rate of 7.2%, maturing in 10 years at a value of $1,000 and a current market price of $800, will have a yield to maturity (using the approximationformula) ofa)between 10% and 10.5%b)between 10.5% and 11%c)between 11.5% and 12%

  • 12Yield to maturity

    A zero coupon rs1000 par value is curently selling for ra 456 and matures in exactly 5 yrs then what is implied market determined semiannual discount rate