Walker Industries has a bond outstanding with 12 years to maturity, a 9% coupon paid annually, and a $1,000 par value. The bond has a 7% nominal yield to maturity, but it can be called in 4 years at a price of $1,025. What is the bond’s nominal yield to call? 6.10% 4.62% 4.83% 5.09% 4.91%

Walker Industries has a bond outstanding with 12 years to maturity, a 9% coupon paid annually, and a $1,000 par value. The bond has a 7% nominal yield to maturity, but it can be called in 4 years at a price of $1,025. What is the bond’s nominal yield to call? 6.10% 4.62% 4.83% 5.09% 4.91%

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 1P

See similar textbooks

Related questions

Q: Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a…

A: Yield to call is the rate of return the bond earns till the date of call, it considers the current…

Q: Baywa has an outstanding bond that has a coupon rate of 8.3%. What is the market price of this bond…

A: The market value of the bond refers to the present value of its expected cash flows. The cash flows…

Q: The face value of a bond is $1,000 and its coupon rate is 3.80% with coupons paid semiannually. Its…

A: Current yield of bond is computed as follows:-Current yield of bond =

Q: enan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon,…

A: Some bonds have the feature of calling back before the expiration of the bond period and the yield…

Q: ce value of a bond is $1,000 and its coupon rate is 3.10% with coupons paid semiannually. Its term…

A: Current yield coupon rate on the market price of bond.Current yield of bond is computed as…

Q: A corporate bond pays interest annually and has 4 years to maturity, a face value of $1,000 and a…

A: Face Value = $1,000Coupon rate = 3.8%No of compounding periods per year = 1Interest per annum = pmt…

Q: Suppose a bond has a face value of $1,000, with a coupon rate of 8%, and five years left to…

A: YTM is also known as Yield to Maturity. It is a capital budgeting technique which helps in decision…

Q: Keenan Industries has a bond outstanding with 15 years to maturity, a 8.25% nominal coupon,…

A: The first step is to calculate current market bond price: In the give question, NPER is = 2 * 15…

Q: What is the bond’s nominal yield to call?

A: First, we need to determine the price of the bond. Price of the bond is the PV of all coupons and…

Q: 00 face value bond has 15 years to maturity and a 7.6% coupon rate (interest is paid annually). If…

A: Yield to maturity is rate at which present value of coupon payment and present value of par value…

Q: A BCE bond has 11 years until maturity and a coupon rate of 6.9% payable annually, and sells for…

A: face value = $1000n= 11 yearscoupon rate = 6.9%price =$1070

Q: Company Z has a bond outstanding with 20 years to maturity, a coupon rate of 9.50% with SEMIANNUAL…

A: Yield to call refers to the financial term used for calculating the return received by the…

Q: An AAA-rated corporate bond has a face value of $1,000 and a credit spread of 4%. The bond has 10…

A: Given:

Q: Field Industries' outstanding bonds have a 20-year maturity and $1,000 par value. Their nominal…

A: Par Value =$1,000 Time period = 20 years Nominal yield to maturity = 9.02% Price of bond = $820…

Q: Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon,…

A: Working note:

Q: A bond has a yield to maturity of 10%. The coupon rate is 8% and the payment is annually. The bond…

A: The rate that a bond earns over the course of its life is referred to as yield to maturity (YTM).…

Q: Calculate the yield to maturity for a bond that has a $1,000 per value, 15 years to maturity, a 4%…

Q: What is the bond's nominal yield to call?

A: Given, coupon = 8.25% semiannual YTM = 6.5% call Price = 1120 FV = 1000 maturity = 15 years year to…

Q: keenan industries has a bond outstanding with 15 years to maturity, an 8.75% coupon paid…

A: Yield to call - The yield to call refers to the return that will be received by the bondholder if…

Q: Tsai Enterprises has a bond outstanding with 25 years to maturity, a 6% coupon paid semiannually,…

A: Par value = $1000Coupon rate = 6%Years to maturity = 25 yearsNominal YTM = 5%Years to call = 5…

Q: A bond has three years to maturity, a $2,000 face value, and a 5.9% coupon rate with annual coupons.…

A: YTM is also known as Yield to maturity. It is a capital budgeting technique which helps in decision…

Q: Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% coupon paid…

A: Information provided: Face Value (FV) = $1000 Annual YTM = 6.75% Semi-annual YTM (r ) = 6.75%/2 =…

Q: Graystone bonds have a maturity value of $1,000. The bonds carry a coupon rate of 12%. Interest is…

A: Answer

Q: Consider a bond with a Par Value of $1,000. It pays a coupon of 7% and the coupon is paid monthly.…

A: Present value of bond is the sum of discounted value of future coupon interest and discounted value…

Q: A corporate bond pays interest annually and has 3 years to maturity, a face value of $1,000 and a…

A: Maturity = 3 yearsFace value = $1000Coupon rate = 3.7%Bond's current price = $997.21Call price =…

Q: The Jupiter Dan Company has a bond outstanding that makes semiannual payments with a coupon rate of…

A: YTM is a useful tool used by investors to evaluate the relative attractiveness of various bonds or…

Q: Consider a 8-year corporate bond issued by Vandalay Industries. The bond has a face value of $1,000,…

A: Bond price refers to the right price of a bond which is also called as the intrinsic value of the…

Q: What is the coupon rate for a bond with 3 years until maturity, a price of $1,053.46, and a yield to…

A: Here, Particulars Values Years to maturity (NPER) 3.00 Current price (PV) $1,053.46 Yield…

Q: Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon,…

A: To calculate the bond's nominal yield to call, we need to find the yield at which the present value…

Question

6.10%

4.62%

4.83%

5.09%

4.91%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Trending now

This is a popular solution!

Step by step

Solved in 6 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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?
Current Yield for Annual Payments Heath Food Corporations bonds have 7 years remaining to maturity. The bonds have a face value of 1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield?
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?
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?
Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds?
Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of 1,000, and has a yield to maturity equal to 9.6%. One bond, Bond C, pays an annual coupon of 10%; the other bond, Bond Z, is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 9.6% over the next 4 years, what will be the price of each of the bonds at the following time periods? Fill in the following table:
Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,045. What is the bond's nominal yield to call? a. 5.09% b. 5.59% c. 6.77% d. 4.42% O e. 5.54%
Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,085. What is the bond’s nominal yield to call? 5.55% 5.91% 6.83% 4.88% 6.10%
Severn Industries has a bond outstanding with 20 years to maturity, a 7.0% coupon paid semiannually, and a $1,000 par value. The bond has a 6.0% nominal yield to maturity, but it can be called in 5 years at a price of $1,072.82. What is the bond’s nominal yield to call? a. 5.00% b. 5.20% c. 5.40% d. 5.60% e. 5.80% no images , no excel solution Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,195. What is the bond's nominal yield to call? Select the correct answer. a. 7.32% b. 7.16% c. 7.64% d. 7.48%
The face value of a bond is $1,000 and its coupon rate is 3.80% with coupons paid semiannually. Its term to maturity is 14 years. If the yield to maturity of the bond is 6.30%, what is the current yield of the bond today? a. 4.94% b. 1.90% c. 3.80% x d. 6.30% e. 2.47%
The face value of a bond is $1,000 and its coupon rate is 3.10% with coupons paid semiannually. Its term to maturity is 7 years. If the yield to maturity of the bond is 6.40%, what is the current yield of the bond today? a.1.90% b.3.10% c.6.40% d.1.55% e.3.80%