Answered: A semiannual corporate bond has a face…

A semiannual corporate bond has a face value of $1,000, a price of $785.24, a coupon rate of 9.5% and 28 years left to maturity. What is the YTM?

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 7P: Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 10% coupon rate,...

See similar textbooks

Related questions

Q: A $1,000 par value bond with a fixed 10% rate of interest pays coupons semiannually. What amount…

A: Given data; par value = $1000 interest rate = 10%

Q: The return on a 5 % coupon bond with a face value of 1.000 TL that initially sells for 950 TL and…

A: Return on bond can be calculated using the following formula: End value of principal+Coupon…

Q: A bond has a time to maturity of 12 years, a coupon rate of 5% with interest paid quarterly, a…

A: Current price of the bond refers to the net present value of bond that is being computed after…

Q: What is the yield-to-maturity of an Acme bond selling for $1,107.50 with 5 years to maturity, a 12…

A: Yield to maturity is the percentage rate which shows the percentage return earned by the investor if…

Q: Suppose a thirty-year bond with a $10,000 face value pays a 0.0% annual coupon (at the end of the…

A: When discount rate is 0 value of bond is sum of cash flow from the bond

Q: A bond has a $1,000 par value, 15 years to maturity, and an 8% annual coupon and sells for $1,080.…

A: Par Value = 1000 Time Period = 15 years Coupon = Coupon Rate × Par Value Coupon = 8% × 1000 Coupon =…

Q: What is the value of a 17-year bond with a face value of P1,000 with a yield to maturity of 7% and…

A: Value of the bond is the sum of the present value value of the coupon payment of the bond and…

Q: The zero coupon bonds of Plarkco, Inc. have a market price of $594.47, a face value of $1,000, and a…

A: A zero coupon bond is the one where the bond does not pay any coupons. The number of years to…

Q: J & J Manufacturing just issues a bond with a GHC100,000 face value and a coupon rate of 7%. If the…

A: Calculations:

Q: a treasury bond has a quoted bid price of 97.125 and a quoted ask price of 97.255. what is the…

A: Ask price is the price at which the seller of an asset is ready to sell the asset. Whereas the bid…

Q: Big Red Corp's outstanding bond issue has a coupon rate of 11.4%, and it sells at a yield to…

A: Bonds: Bond is a long-term financial instrument issued by a company for which the company pays…

Q: . A corporate bond has a face value of P1,000 and pays a P50 coupon every six months. The bond…

A: You have asked a question with multiple parts. As a result, we will solve first 3 parts for you as…

Q: A semiannual corporate bond has a face value of $1,000, a price of $785.24, a coupon rate of 9.5%…

A: YTM =C + FV -MPNFV+MP2 where C = Coupon payment FV = Face value MP = Market value N = Number of…

Q: Suppose the investor’s rate is 9% in the ₱50,000, 7.5% bond with coupons paid semi-annually. The…

A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…

Q: what is the par value of the bond?

A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…

Q: What is the coupon rate of an annual bond that has a yield to maturity of 8.5%, a current price of…

A: Face value (F) = $1000 Let the coupon rate = c Coupon (C) = c% of $1000 = $10c r = YTM = 8.5% n = 13…

Q: Suppose a 10-year, $1,000 bond with a 9% coupon rate and semiannual coupons is trading for a price…

A: a) Computation:

Q: A company releases a five-year bond with a face value of $1000 and coupons paid semiannually. If…

A: Given: Face value =$1000YTM =8%Bonds issued =At premium

Q: A zero coupon bond has a face value of $1,000 and matures in 6 years. Investors require a(n) 7.8%…

A: Bond value is the current worth of a bond on the basis of the present value of all the cash flows it…

Q: An investor is interested in buying a corporate bond with a face value of $1,000, AA rating, and a…

A: The fair value of bond is calculated by discounting the cash inflows from the bonds using…

Q: Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.3 percent, a…

A: Given, two bonds Bond X and Bond Y Both bonds have face value of $1000

Q: A 30-year, $1,000 par value bond has an annual payment coupon of 7.5%. The bond currently sells for…

A: The presentation of the interest expense and coupon payments for a bond is different, the interest…

Q: Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8.8 percent, a…

A: Given, Two bonds bond X and Bond Y Both have same time to maturity of 13 years.

Q: Assume a $1,000 face value bond has a coupon rate of 8.5 percent, pays interest semi-annually, and…

A: Face Value of the Bond=$1,000 Duration (n)=8*2=16 periods Coupon rate=8.5% Thus, Periodic coupon…

Q: An AAA-rated corporate bond has a face value of $1,000 and a credit spread of 4%. The bond has 10…

A: Given:

Q: A BBB-rated corporate bond has a yield to maturity of 6.6%. A U.S. Treasury security has a yield to…

A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type])…

Q: Given the following information, what is the approximate convexity measure for the bond if the yield…

A: Formula for approximate Convexity is as below:

Q: Suppose a seven-year, $1,000 bond with a 5.98% coupon rate and semiannual coupons is trading with a…

A: Par value of bond (FV) = $1000 Coupon rate = 5.98% Semi annual coupon amount (C) = 1000*0.0598/2 =…

Q: A 6-year bond pays interest of $80 annually and sells for $975. What is its coupon rate, current…

A: Coupon rate: Coupon rate is the rate at which a bond is paying interest at a regular interval.…

Q: what is the par value of the bond? P 6,130.08 P 5,816.44 P 5,750.45 P 6,209.11

A: Par value refers to price or value of a bond offered by the company at the time of issuance. It is…

Q: You are eyeing an investment in a corporate bond which has a YTM of 14.95%, and a stated rate of…

A: Value of the bond is the present value of the future payments to be received. Future value payments…

Q: You are given the following information on two traded bonds making semi-annual coupon payments.…

A: YTM or Yield to maturity is the rate of return expected on a debt instrument considering the fact it…

Q: A company has a P1,200 face value bond with 8 years until maturity. The bond possesses a…

A: Approximate Yield to maturity is the rate of return of a bond with an assumption that the bond will…

Q: What is the price of a 17-year bond paying 7.7 % annual coupons with a face (par) value of $1,000 if…

A: The present value of the bond is used to compute the price of the bond. Where, Time Period = 17…

Q: What is the YTM of a bond with 12 years to maturity, coupon rate of 10% paid annually, par value of…

A: Yield to maturity (YTM) is the discount rate or the rate of return that an investor earns by holding…

Q: Based on quarterly compounding, what would be yield-to-maturity (YTM) be on a 12-year, zero-coupon,…

A: Given Information : Par value of Bond = $1000 Current traded price = $456.78 Number of years to…

Q: A $1,000, 12 year bond carries a 3.5% coupon. If the prevailing market rate on the date of purchase…

A: Bond is a type of long-term debt instrument used by government and corporations to raise loan.

Q: What is the price of each bond today? (Do not round intermediate calculations. Round your answers to…

A: INTRODUCTION Bond price is the amount for which bond is selling in the market. At this price, a…

Q: A 30-year, $1,000 par value bond has an annual payment coupon of 7.5%. The bond currently sells for…

A: Given: Years = 30 Par value = $1,000 Coupon = 7.5% Current price = $910

Q: A bond has a face value of ₱100, 000, 4-year maturity period, and 3.2% coupon. What is the total…

A: To calculate the total interest paid we will use the below mentioned formula Total interest paid =…

Q: A 10-year bond with a face value of $1,000 currently sells for $1,110. Which of the following…

A: A firm can finance its business operations through equity and debt capital. Equity capital…

Q: Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7 percent, has a…

A: Price of a bond can be caluclated as the sum of present value of all the coupon payments made and…

Q: A company offers a bond with a coupon of 3.4% with semiannually payments and a yield to maturity of…

A: Bond is a financila debt instrumeny issued by the firm to raise capital. price of bond formula:…

Q: If a P1,000 bond sells for P1,125, which of the following statements are correct? I. The market rate…

A: given, market price = p1125 par= p1000

Q: A 20-year, 10% monthly-pay bond has a par value of $1,000. If the price of the bond is $887.14, its…

A: Face value = $1,000 Current price of the bond = $887.14 Time (in years) = 20 years Coupon rate = 10%…

Q: A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to…

A: Current yield is the annual yield earned from the value paid at time 0.

Question

A semiannual corporate bond has a face value of $1,000, a price of $785.24, a coupon rate of 9.5% and 28 years left to maturity. What is the YTM?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Solution:

VIEW

Calculation:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

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?
Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of 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?
Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?
Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?