Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 24, Problem 11P
General Electric has just issued a callable 10-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $102. What is the bond’s yield to maturity and yield to call?
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A bond has 10 years remaining to maturity, pays annual coupons (yesterday) of $6, and has a face value of $100. The current price of the bond is $125.591 and the price next
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General Electric has just issued a callable (at par) 10-year, 6.3% coupon bond with annual coupon payments. The bond
can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $101.68.
a. What is the bond's yield to maturity?
b. What is its yield to call?
c. What is its yield to worst?
a. What is the bond's yield to maturity?
The bond's yield to maturity is%. (Round to two decimal places.)
b. What is its yield to call?
The yield to call is%. (Round to two decimal places.)
c. What is its yield to worst?
The yield to worst is%. (Round to two decimal places.)
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of 1000, and a coupon rate of 7.8% (annual payments). The yield to maturity on this bond when it was issued was 6.2%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?
After the first coupon payment, the price of the bond will be $_____ (Round to the nearest cent.)
Chapter 24 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 24.1 - List four types of corporate debt that are...Ch. 24.1 - Prob. 2CCCh. 24.2 - Prob. 1CCCh. 24.2 - Prob. 2CCCh. 24.2 - What is an asset-backed security?Ch. 24.3 - Prob. 1CCCh. 24.3 - Prob. 2CCCh. 24.4 - What is a sinking fund?Ch. 24.4 - Do callable bonds have a higher or lower yield...Ch. 24.4 - Prob. 3CC
Ch. 24 - Explain some of the differences between a public...Ch. 24 - Why do bonds with lower seniority have higher...Ch. 24 - Explain the difference between a secured corporate...Ch. 24 - Prob. 4PCh. 24 - Prob. 5PCh. 24 - Suppose on January 15, 2013, the U.S. Treasury...Ch. 24 - Prob. 7PCh. 24 - Describe what prepayment risk in a GNMA is.Ch. 24 - Prob. 9PCh. 24 - Explain why bond issuers might voluntarily choose...Ch. 24 - General Electric has just issued a callable...Ch. 24 - Prob. 12PCh. 24 - Explain why the yield on a convertible bond is...Ch. 24 - Prob. 14P
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