a) Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually.Calculate the current yield and the yield to maturity (b) Assume a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent what is the value of the bond? ( 1) What would be the value of the bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Wouldwe now have a discount or a premium bond?i) What would happen to the bonds' value if inflation fell, by 3 %? Would we now have a premium or a discount bond?

Current yield is the coupon payment which is to be paid for the market price of a bond. It is…

Answered: a) Bonds of TLM Corporation with a par…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 16P

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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?
Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
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?
a) Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually. Calculate the current yield and the yield to maturity b) Assume a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent what is the value of the bond? i) What would be the value of the bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now have a discount or a premium bond? ii) What would happen to the bonds' value if inflation fell, by 3 %? Would we now have a premium or a discount bond?
Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually. a. Calculate the current yield and the yield to maturity Assume a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent what is the value of the bond? b. What would be the value of the bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now have a discount or a premium bond? c. What would happen to the bonds' value if inflation fell, by 3 %? Would we now have a premium or a discount bond
Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually. Calculate the current yield and the yield to maturity Assume a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent what is the value of the bond? What would be the value of the bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now have a discount or a premium bond? What would happen to the bonds' value if inflation fell, by 3 %? Would we now have a premium or a discount bond (a) Current yield = YTM = (b) Bond price (i) Bond price = Disc/Prem: (ii) Bond price = Disc/Prem:
Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually. Calcavecchia the current yield and the yield to maturity. Assume a 10-year, R1,000 par value bond with a 10% annual coupon if its required rate of return is 10% what is the value of the bond? What would be the value of the Bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now hae6a discount or a premium bond? What would happen to the bond's value of inflation fell, by 3%? Would we now have a premium or a discount bond?
A)calculate the value of a bond that matures in 12 years and has a 1000 par value . the annual rate is 8% and the markets required yield to marurity on a comparable risk bond is 12% b) what will be the value of the bond be if the payments are semi annual? c) explain the four relationships of a corporate bond.
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