A bond's market price is $800. It has a $1,000 par value, will mature in 6 years, and has a couponinterest rate of 11 percent annual interest, but makes its interest payments semiannually. What isthe bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in12 years? What if it matures in 3 years?

ExplanationStep 1Yield to maturity (YTM) represents the expected annual rate of return earned on a…

Answered: A bond's market price is $800. It has a…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter5: Bonds, Bond Valuation, And Interest Rates

Section: Chapter Questions

Problem 5MC: What would be the value of the bond described in Part d if, just after it had been issued, the...

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Similar questions

What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)
A bond's market price is $700. It has a $1,000 par value, will mature in 6 years, and has a coupon interest rate of 11 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12years? What if it matures in 3 years?
(Yield to maturity) A bond's market price is $825. It has a $1,000 par value, will mature in 6 years, and has a coupon interest rate of 11 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12 years? What if it matures in 3 years? a. The bond's yield to maturity if it matures in 6 years is b. The bond's yield to maturity if it matures in 12 years is c. The bond's yield to maturity if it matures in 3 years is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)
(Yield to maturity) A bond's market price is $1,200. It has a $1,000 par value, will mature in 6 years, and has a coupon interest rate of 9 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12 years? What if it matures in 3 years? a. The bond's yield to maturity if it matures in 6 years is %. (Round to two decimal places.)
(Calculating yield to maturity) A bond's market price is $750. It has a $1000 par value, will mature in 8 years, and has a coupon interest rate of 9 percent annual interest but makes its interest payment semiannually. What is the bond's yield to maturity ? What happens to the bond's yield to maturity if the bond matures in years ? What if it matures in 4 years?
(Yield to maturity) A bond's market price is $1,125. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 12 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 16 years? What if it matures in 4 years?
A bond's market price is $775. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 9 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 16 years? What if it matures in 4 years?
Consider a bond that pays 7% semiannually and has 12 years to maturity. The market requires an interest rate of 4% on bonds of this risk. What is this bond's price?
A bond has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. a) If the bond has a yeild to maturity of 9% 1 year from now, what will its price be at that time? b) What will be the rate of return on the bond? c) Now assume that interest is paid semannually. What will be the rate of return on the bond? d) If the inflation rate during the year is 3% what is the real rate of return on the bond?
Assume a bond with a 10% annual rate has 8 years left to maturity when market rates are at 12%. Assume semi-annual payments. What is the price of the bond at 3 different points in time - today, in 1 year, and in 2 years. Is this a discount or premium bond, and what do you notice about the relationship between the price and maturity value (FV) over time?
A bond has 6 years remaining to maturity, pays annual coupons (yesterday) of $7.4, and has a face value of $100. The current price of the bond is $73.701 and the price next year is expected to be $76.767. (Interest rates are not expected to change over the coming year.) What is the return on the bond if you hold it for one year?by Formula pls.
A bond has the following features: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: 12 years What will the holder receive when the bond matures? Principal or All coupon payments? If the current rate of interest on comparable debt is 9 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Would you expect the firm to call this bond? Why? -Yes or No, since the bond is selling for a discount or premium? If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for twelve years if the funds earn 9 percent annually and there is $120 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. $

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