a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. 7.10 % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. 6.62 %
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- It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has an 8.5% annual coupon and had a 15-year original maturity. (It matures on December 31, 2033.) There is 5 years of call protection (until December 31, 2023), after which time it can be called at 108-that is, at 108 % of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 111.55% of par, or $1,115.50. a. What is the yield to maturity? Do not round Intermediate calculations. Round your answer to two decimal places. What is the yield to call? Do not round Intermediate calculations. Round your answer to two decimal places. % b. If you bought this bond, which return would you actually earn? I. Investors would expect the bonds to be called and earn the YTC because the YTC is less than the YTM. II. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. III. Investors would not…It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has a 9.5% annual coupon and had a 20-year original maturity. (It matures on December 31, 2038.) There is 5 years of call protection (until December 31, 2023), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 120.08% of par, or $1,200.80. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. _____ % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. ____ %It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has an 8.5% annual coupon and had a 30-year original maturity. (It matures on December 31, 2048.) There is 5 years of call protection (until December 31, 2023), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 116.57% of par, or $1,165.70. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. % If you bought this bond, which return would you actually earn? Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. Investors would expect…
- It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has an 8.5% annual coupon and had a 30-year original maturity. (It matures on December 31, 2048.) There is 5 years of call protection (until December 31, 2023), after which time it can be called at 108-that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 116.57% of par, or $1,165.70. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. % b. If you bought this bond, which return would you actually earn? I. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. II. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. III. Investors…It is now January 1, 2019, and you are considering the purchase of an outstanding bond that was issued on January 1, 2017. It has an 8.5% annual coupon and had a 15-year original maturity. (It matures on December 31, 2031.) There is 5 years of call protection (until December 31, 2021), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 111.55% of par, or $1,115.50. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. b. What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places.It is now January 1, 2019, and you are considering the purchase of an outstanding bond that was issued on January 1, 2017. It has a 9.5% annual coupon and had a 20-year original maturity. (It matures on December 31, 2036.) There is 5 years of call protection (until December 31, 2021), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 120.08% of par, or $1,200.80. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. % If you bought this bond, which return would you actually earn? Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. Investors would not…
- It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has a 9.5% annual coupon and had a 30-year original maturity. (It matures on December 31, 2048) There is 5 years of call protection ( until December 31, after which time it can be called at 108 - that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 116.57% of par, or $1,165.70. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. % b. If you bought this bond, which return would you actually earn? I. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. II. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. III. Investors…It is now January 1, 2018, and you are considering the purchase of anoutstanding bond that was issued on January 1, 2016. It has an 8% annual coupon and hada 30-year original maturity. (It matures on December 31, 2045.) There is 5 years of call protection(until December 31, 2020), after which time it can be called at 108—that is, at 108%of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at119.12% of par, or $1,191.20.a. What is the yield to maturity? What is the yield to call?b. If you bought this bond, which return would you actually earn? Explain your reasoning.c. Suppose the bond had been selling at a discount rather than a premium. Would theyield to maturity have been the most likely return, or would the yield to call havebeen most likely?Consider an investor who, on January 1, 2022, purchases a TIPS bond with an original principal of $111,000, an 10 percent annual (or 5 percent semiannual) coupon rate, and 15 years to maturity. a. If the semiannual inflation rate during the first six months is 0.5 percent, calculate the principal amount used to determine the first coupon payment and the first coupon payment (paid on June 30, 2022). b. From your answer to part a, calculate the inflation-adjusted principal at the beginning of the second six months. c. Suppose that the semiannual inflation rate for the second six-month period is 1.3 percent. Calculate the inflation-adjusted principal at the end of the second six months (on December 31, 2022) and the coupon payment to the investor for the second six-month period. (For all requirements, round your answers to 2 decimal places. (e.g., 32.16)) a. Principal amount Coupon payment b. Inflation-adjusted principal c. Inflation-adjusted principal at the end of the second six months…
- eBook It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has a 9% annual coupon and had a 20-year original maturity. (It matures on December 31, 2038.) There is 5 years of call protection (until December 31, 2023), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 114.12% of par, or $1,141.20. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. %It is now January 1, 2019, and Morgan Bush is considering the purchase of an outstanding bond that was issued on January 1, 2013. The bond has a 20-year original maturity and an 8 percent annual coupon (paid semiannually). The bond has call protection for 10 years, after which the bond can be called for 104 percent of par (or $1040). Interest rates have increased since the bond was issued, so the bond is now selling at $980. Which of the following statements is most CORRECT? a. The yield to maturity is 8.24%. If rates on new bonds of this type decrease by 2 percent four years from now, the bond will probably be called. b. The yield to call is 9.46 percent and the yield to maturity of 8.24 percent. SInce the YTC is greater than the YTM, the bond will probably not be called c. The yield to call is only 4.73 percent, so if rates do not change in the next 4 years, the bond will probably not be called. d. The yield to maturity is 4.12 percent, so if rates stay the same for the next 4 years,…It is now January 1, 2018, and you are considering the purchase of an outstanding bond that was issuedon January 1, 2016. It has an 8% semi-annual coupon and had a 30-year original maturity. (It matureson December 31, 2045.) There is 5 years of call protection (until December 31, 2020), after which timeit can be called at 108—that is, at 108% of par. Interest rates have declined since it was issued, and it isnow selling at 119.12% of par. A. What is the yield to maturity? What is the yield to call? B. If you boughtthis bond, which return would you actually earn? Explain your reasoning. C. Suppose the bond had beenselling at a discount rather than a premium. Would the yield to maturity have been the most likelyreturn, or would the yield to call have been most likely? If the answer of yield to maturity is increasedby 7% then what will be the present value of bond?