You find the following corporate bond quotes. To calculate the number of years u

Question

You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016. The bonds have a par value of $2,000 Last Yield 20 5.36 7.06 EST S Vol (000's) 57,373 48,952 43,813 Company (Ticker) Last Price 94.293 Xenon, Inc. (XIC) Kenny Corp. (KCC) Williams Co. (WICO) Coupon 6.500 7.230 Maturity Jan 15, 2031 Jan 15, 2030 Jan 15, 2037 94.845 What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price What is the bond's current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Current yield

Explanation / Answer

1. The bond price equation is:

P= $72.30(PVIFA2.68%,28) + $2,000(PVIF2.68%,28)

P= $72.30 x 19.5199 + $2,000 x 0.4769

P= $1,411.29 + $953.80 = $2,365.09

2: The current yield is the annual coupon payment divided by the bond price, so:

Current yield = $144.60 / $2,365.09

Current yield = .0611, or 6.11%

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