RTE Inc has 9 annual coupon bonds that are callable and have 18 years left until maturity The bonds have a par value of $1,000 and their current market price is $1,130 35 However RTE might call the bonds in 8 years at a call price of $1,060 1 What is the TYM a) 8 55 b) 7 09 c) 9 59 d) 7 64 2 What i...

1 YTM 764 Calculation Formula for YTM C FPNFP2 Here c co ...

RTE Inc has 9% annual coupon bonds that are callable and have 18 years left until maturity.

Question:

RTE Inc has 9% annual bonds that are callable and have 18 years left until maturity. The bonds have a of $1,000 and their current market price is $1,130.35. However RTE might call the bonds in 8 years at a call price of $1,060.
1. What is the TYM?
a) 8.55%
b) 7.09%
c) 9.59%
d) 7.64%
2. What is the YTC?
a) 7.36%
b) 9.59%
c) 7.64%
d) 6.47%
3. If interest rates are expected to remain constant, what is the best estimate of the remaining life left for RTE lncs bonds?
a) 8 yrs
b) 5 yrs
c) 13 yrs
d) 10 yrs
4. If RTE issued new bonds today, what rate must have to be issued at par? _____ -options:
a) 8.32%
b) 7.64%
c) 7.09%
d) 9.59%
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...