The Green Cable Corporation issued a newseries of bonds on January 5, 2015. The bonds weresold at par ($1,000), have a 6% coupon rate, andmature in 30 years on December 31, 2045. Couponinterest payments are made semiannually (on June 30and December 31).(a) What was the yield to maturity (YTM) of thebond on January 5, 2015?(b) Assuming that interest rates had fallen to 5%,what was the price of the bond on January 1,2020 (five years later)?(c) On July 1, 2017, the bonds sold for $922.38.What was the YTM at that date? What was thecurrent yield at that date?
The Green Cable Corporation issued a newseries of bonds on January 5, 2015. The bonds weresold at par ($1,000), have a 6% coupon rate, andmature in 30 years on December 31, 2045. Couponinterest payments are made semiannually (on June 30and December 31).(a) What was the yield to maturity (YTM) of thebond on January 5, 2015?(b) Assuming that interest rates had fallen to 5%,what was the price of the bond on January 1,2020 (five years later)?(c) On July 1, 2017, the bonds sold for $922.38.What was the YTM at that date? What was thecurrent yield at that date?
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EB: Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market...
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Question
The Green Cable Corporation issued a new
series of bonds on January 5, 2015. The bonds were
sold at par ($1,000), have a 6% coupon rate, and
mature in 30 years on December 31, 2045. Coupon
interest payments are made semiannually (on June 30
and December 31).
(a) What was the yield to maturity (YTM) of the
bond on January 5, 2015?
(b) Assuming that interest rates had fallen to 5%,
what was the price of the bond on January 1,
2020 (five years later)?
(c) On July 1, 2017, the bonds sold for $922.38.
What was the YTM at that date? What was the
current yield at that date?
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