Question 1/[a]. Consider some bonds with one annual coupon payment of 7.25%. Thebonds have a par value of $1,000, a current price of $1,125, andthey will mature in 13 years. What is the yield to maturity onthese bonds? [a]. Couponrate 7.25% N 13 PV =Price $1,125 PMT $72.50 FV =Par $1,000 I/YR 5.85% = YTM 2/ [b]. Sadik Inc.'s bonds currently sell for $1,280 and have a parvalue of $1,000. They pay a $135 annual coupon and have a 15-yearmaturity, but they can be called in 5 years at $1,050. What istheir yield to call (YTC)? Answer 7.45%
Question
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1/[a]. |
Consider some bonds with one annual coupon payment of 7.25%. Thebonds have a par value of $1,000, a current price of $1,125, andthey will mature in 13 years. What is the yield to maturity onthese bonds? |
[a].
Couponrate 7.25%
N 13
PV =Price $1,125
PMT $72.50
FV =Par $1,000
I/YR 5.85% = YTM
2/
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[b]. |
Sadik Inc.'s bonds currently sell for $1,280 and have a parvalue of $1,000. They pay a $135 annual coupon and have a 15-yearmaturity, but they can be called in 5 years at $1,050. What istheir yield to call (YTC)? |
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Answer 7.45%
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