Yield to call Ten years ago the Singleton Company issued 22-year bonds with a 10
ID: 2638602 • Letter: Y
Question
Yield to call
Ten years ago the Singleton Company issued 22-year bonds with a 10% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Singleton called the bonds.
Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.
Yield to maturity
Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%.
What is the yield to maturity at a current market price of
$845? Round your answer to two decimal places.
$1,079? Round your answer to two decimal places.
Explanation / Answer
Yield to call
Ten years ago the Singleton Company issued 22-year bonds with a 10% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Singleton called the bonds.
Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.
Price = 1000*1.09 = 1090
YTC = rate(nper,pmt,pv,fv)
YTC = rate(10,100,-1000,1090)
YTC = 10.55%
Yield to maturity
Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%.
What is the yield to maturity at a current market price of
$845? Round your answer to two decimal places.
YTM = rate(nper,pmt,pv,fv)
YTM = rate(4,80,-845,1000)
YTM = 13.24%
$1,079? Round your answer to two decimal places.
YTM = rate(nper,pmt,pv,fv)
YTM = rate(4,80,-1079,1000)
YTM = 5.73%
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