YTM and YTC Rates investors earn from owning bonds A bond has a face value of: 400,000 It's annual coupon rate is: 4.7% Originally, it had this many years until it matured: 22 Years since issuing the bond 3 Bonds can be called for 412,000 Original provision to delay calling bonds (in years) 10 Current price of bond 364,000 1. What annual rate of return would an investor earn if she held the bond until it matured? A Between 0.0% and 4.0% B Between 4.0% and 5.0% C Between 5.0% and 6.0% D Between 6.0% and 9.0%

Here, Face Value of Bond is $400,000 Coupon Rate is 4.7% Therefore, Coupon amount = $400,000 * 4.7%…

Answered: YTM and YTC…

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 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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		YTM and YTC



Rates investors earn from owning bonds

A bond has a face value of:		400,000
It's annual coupon rate is:			4.7%
Originally, it had this many years until it matured:	22
Years since issuing the bond		3


Bonds can be called for			412,000
Original provision to delay calling bonds (in years)	10

Current price of bond			364,000

1. What annual rate of return would an investor earn if she held the bond
until it matured?
A Between 0.0% and 4.0%
B Between 4.0% and 5.0%
C Between 5.0% and 6.0%
D Between 6.0% and 9.0%

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