Problem 10-32 (Algo) A 25-year maturity, 8.4% coupon bond paying coupons semiannually is callable in six years at a call price of $1,120. The bond cu sells at a yield to maturity of 7.4% (3.70% per half-year). Required: a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call %

Problem 10-32 (Algo) A 25-year maturity, 8.4% coupon bond paying coupons semiannually is callable in six years at a call price of $1,120. The bond cu sells at a yield to maturity of 7.4% (3.70% per half-year). Required: a. What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call %

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 8P

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Yield to call
8. Subject :- Finance
Question 1. Duration and Banking Consider a 5-year bond with annual coupon payments. The bond has a face value (prin- cipal) of $100 and sells for $95. Its coupon rate is 3%. (The coupon rate is the ratio between the coupon value and the face value). The face value is paid at the maturity year in addition to the last coupon payment. 1. Calculate the bond's yield to maturity (YTM) and duration using its YTM. 2. Suppose the bond's YTM changes in the same way as a 5-year T-bill interest rate. Use the bond's modified duration to evaluate the relative change in the 5-year bond's value if the interest rate on 5-year T-bills falls by one basis point, that is, by 0.0001. This part was extracted from the balance sheet of the First Bank of Australia: Assets (Billion AUD) Bond 80 Liabilities (Billion AUD) Fixed-rate liabilities 60 where "Bond" here refers to the bond we specified above and the fixed-rate liabilities (banks future payment obligations) have an average duration of 4 years and YTM of…
Problem 10-41 (Algo) The yield to maturity on one-year zero-coupon bonds is 7.3%. The yield to maturity on two-year zero-coupon bonds is 8.3%. Required: a. What is the forward rate of interest for the second year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Forward rate of interest b. If you believe in the expectations hypothesis, what is your best guess as to the expected value of the short-term interest rate next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Short-term interest rate %
Q.A $35,000, 5% bond that matures in 10 years has interest payable semiannually. If the quoted price is $36,500, what is the yield rate? Cannot use Excel or a financial calculator. Please show step by step work.
Finance All parts
Question 1 Suppose a 2 year bond with F = C = 1000, and a nominal annual coupon rate convertible semian- nually of 10% is purchased at a price to yield 8% convertible semiannually. (a) Calculate the price of the bond using the basic formula, and the premium/discount formula. Hint: 1036.30 (b) Calculate the BV after 1 year (2 terms). Hint: 1018.86 (c) Calculate the amount of interest in the third coupon. Hint: 40.75 (d) Calculate the amount of amortization of premium in the third coupon. Hint: 9.25