Charlotte's Clothing issued a 8 percent bond with a maturity date of 18 years. Six years have passed and the bond is selling for $865. Assume that the bond pays interest annually.
Charlotte's Clothing issued a 8 percent bond with a maturity date of 18 years. Six years have passed and the bond is selling for $865. Assume that the bond pays interest annually.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Charlotte's Clothing issued a 8 percent bond with a maturity date of 18 years. Six years have passed and the bond is selling for $865. Assume that the bond pays interest annually.
-
What is the current yield? Round your answer to two decimal places.
%
-
What is the yield to maturity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number.
%
-
If four years later the yield to maturity is 10 percent, what will be the price of the bond? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.
$
Transcribed Image Text:Appen dir
D
pen.
Time
Period
18%
20%
24%
28%
8%
12%
14%
15%
16%
8%
9%
10%
(e.g.,
year)
5%
6%
7%
806 .781
1.080
2%
3%
4%
.862
.847 .833
1%
.893
.877 .870
2 980 961 .943 .925 907 .890 .873 .857 .842 .826 .797 .769 .756 .743 718 .694 .650.610
3 .971 942 .915 .889 .864 .840 .816 .794 .772 .751 .712 .675 .658 .641 .609 .579 .524 .477
.909
.943
.935 .926 917
1.166
1.260
980
.971 962
.952
1
.990
4 961 .924 .889 .855 .823 .792
5 .951 .906 .863 .822
.763 735 .708 .683 .636 .592 .572 .552 .516 .482 .423 .373
.713 .681 .650 .621 567 .519 .497 476 .437 .402 .341 .291
.227
1.360
1.
469
1.5
.784
.747
.275
6 .942 .888 .838 .790 .746 705 66 7630 .596 .564 .507 .456 .432 .410
7 933 .871 .813 .760 .711 .665 .623 .583 547 .513 452 400 376 .354 314 .279 222
8 923 .853
914
370 .335
587 1.67
.178
14
1.82
51
1.993
.139
.179
.144
.789 .731 .677 .627 .582 .540 .502 .467
.766 703 .645 .592
.404 .351 .327 .305 266 .233
.108
.460 424 361 .308 .284 .263 226 .194
.322 .270 .247
544
.500
2.172
2.367
837
.227 .191 .162
.116 .085
.905 .820
.744 .676 .614 .558 508 .463 422 .386
10
.237 .215 .195 .162 .135 .094 .066
.208 .187 .168 .137 .112 .076 .052
.475
.429 388 350
.287
11 .896
12 .887 788
13
.804 .722 .650 .585 .527
.701 .625 557
773 .681 .601 .530
2.580
2.813
3.066
3.342
3.642
.257
444 397 356 .319
415 368 .326 .290 .229 .182 .163 .145 .116 .093 .061 .040
388 340 .299 .263 .205 .160 .141 .125 .099 .078 .049 .032
.497
.469
.879
.870 .758 .661 .577
14
.505
.442
.040 .025
15 861 .743 .642 555 .481 417 362 .315 275 .239 .183 .140.123 .108 .084 .065
.019
231 .198 .146 .108 .093 .080 .060 .045 .026 .015
.180 .130 .095 .081 .069 .051 .038 .021 .012
16 .853 728 .623 .534 .458 .394 339 .292 .252 .218 .163 .123 .107 .093 .071 .054 .032
3.970
4.5
328
5.0
717 5.56
.270
17 .844 .714 .605 .513
18 .836 .700 .587
19
.436 .371 317
.416 .350 .296 .250
396 331
.377 .312
.212
.276 .232 .194 .164 116 .083 .070 .060 .043 .031 .017 .009
.104 .073 .061
494
828 .686 .570
475
.051 .037 .026
.014 .007
.149
142 6.11e
104
20
.820
673 .554
456
258 .215 .178
.059 .038 .030
.024 .016
.010
.005 .002
6.727
25
780 .610 478 .375 .295 .233
.184 .146 .116
.092
.001
23 10.835
30
742 .552 412 308 .231
.033 .020
.015
.012
.007
.004
.002
.174
.131
.099 .075
.057
B 17.449
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