Yield to maturity.Each of the bonds shown in the following table pays interestannually. Bond Par value Coupon
Fantastic news! We've Found the answer you've been seeking!
Question:
Yield to maturity.Each of the bonds shown in the following table pays interestannually. | ||||||||||
Bond | Par value | Coupon rate | Years to maturity | Current value | ||||||
A | $ 1,000 | 9% | 8 | $820 | ||||||
B | 1,000 | 12% | 16 | 1,000 | ||||||
C | 500 | 12% | 12 | 560 | ||||||
D | 1,000 | 15% | 10 | 1,120 | ||||||
E | 1,000 | 5% | 3 | 900 | ||||||
a. | Calculate the yield to maturity (YTM) for each bond. | |||||||||
b. | What relationship exists between the coupon rate and yield to maturity and the par value and market value of a bond | |||||||||
Solution | ||||||||||
a. | Calculate the yield to maturity (YTM) for each bond. | |||||||||
Bond A | Bond B | Bond C | Bond D | Bond E | ||||||
Par value | ||||||||||
Coupon rate | ||||||||||
Years to maturity | ||||||||||
Coupon payment | ||||||||||
Payments per year | ||||||||||
Current value | ||||||||||
YTM | ||||||||||
b. | What relationship exists between the coupon rate and yield to maturity and the par value and market value of a bond? | |||||||||
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date: