Semi-annual bonds-determine the yield-to-maturity

Assignment Help Financial Management

Reference no: EM13876325

Two years ago, Trans-Atlantic Airlines sold $250 million worth of bonds at $1,000 each. These semi-annual bonds had a maturity of 12 years and a coupon rate of 12.5%. Today these bonds are selling for $1,000. Determine the yield-to-maturity.

A. 13.24%

B. 5.59%

C. 13.72%

D. 10.84%

Please show work or calculator inputs.

Reference no: EM13876325

Questions Cloud

What is the net present value for each project : Suppose the cost of capital is 10% and the $1 million initial outlays are paid out by installments, that is, the $1 million initial outlays are present values for the regular payments each year, what is the Net Present Value for each project?

An analyst has modeled the stock of crisp trucking : An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If Bi1= 0.7 and Bi2= 0.9, what is..

The standard deviation of stock returns for stock : The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A's beta?

Determine the tension in rope : In trying to move across a slippery icy surface, a 175-lb man uses two ropes AB and AC. Knowing that the force exerted on the man by the icy surface is perpendicular to that surface, determine the tension in each rope.

Semi-annual bonds-determine the yield-to-maturity : Two years ago, Trans-Atlantic Airlines sold $250 million worth of bonds at $1,000 each. These semi-annual bonds had a maturity of 12 years and a coupon rate of 12.5%. Today these bonds are selling for $1,000. Determine the yield-to-maturity.

What causes cash flow and net profit to diverge : Need the answers to the following questions : 1. what causes cash flow and net profit to diverge ? when will they be the same ? 2. what role does the five Cs of credit play in managing the receivables area?

Which of the given statements is most likely correct : On the basis of this report, which one of the following statements is most likely correct? An increase in conformance costs resulted in a higher-quality product and, therefore, a decrease in nonconformance costs.

What is default risk premium on corporate bond : A Treasury bond that matures in 10 years has a yield of 6%. A10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond?

Discuss differences between cash flow and accounting income : 1. Discuss differences between cash flow and accounting income and why it is important to use cash flow in making capital budgeting decisions.2. How do companies generate ideas for capital projects? Give some examples of capital projects that compani..

User Account

All Pages