What is bonds nominal yield to maturity and current yield

Assignment Help Financial Management

Reference no: EM131523730

Bond yields

One year ago Carson Industries issued a 10-year, 15% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,075, and it now sells for $1,270.

a. What is the bond's nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. What is the bond's nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.

b. What is the current yield? Round your answer to two decimal places.

CHOOSE CORRECT ANSWER

Is this yield affected by whether the bond is likely to be called?

I.If the bond is called, the current yield will remain the same but the capital gains yield will be different.

II.If the bond is called, the current yield and the capital gains yield will remain the same.

III.If the bond is called, the capital gains yield will remain the same but the current yield will be different.

IV.If the bond is called, the current yield and the capital gains yield will both be different.

V.If the bond is called, the current yield and the capital gains yield will remain the same but the coupon rate will be different. c.What is the expected capital gains (or loss) yield for the coming year?

Use amounts calculated in above requirements for calcuation, if reqired. Round your answer to two decimal places. Enter a loss percentage, if any, with a minus sign.

CHOOSE CORECT ANSWER

Is this yield dependent on whether the bond is expected to be called?

I.The expected capital gains (or loss) yield for the coming year does not depend on whether or not the bond is expected to be called.

II.If the bond is expected to be called, the appropriate expected total return is the YTM.

III.If the bond is not expected to be called, the appropriate expected total return is the YTC.

IV.If the bond is expected to be called, the appropriate expected total return will not change.

V.The expected capital gains (or loss) yield for the coming year depends on whether or not the bond is expected to be called.

Reference no: EM131523730

Questions Cloud

How can avon handle making alliances globally : How can Avon handle making alliances and acquisitions globally and discus Avon's corporate strategy for structuring, and learning globally?

Compare and contrast secure borrowing and sale of receivable : Compare and contrast secured borrowing and sale of receivables. Also, recommend one of the methods that the company should use in order to obtain cash.

Government enacts a welfare- reducing policy : Referencing the class on political economy, what explains why the government enacts a welfare- reducing policy?

History of discrimination against this group in the u.s. : Develop a 9-12 slide PowerPoint presentation on the Asian-American group assigned to you in Week. History of discrimination against this group in the U.S.

What is bonds nominal yield to maturity and current yield : What is the bond's nominal yield to maturity? What is the current yield?

Build a linked-tree in precisiontree : The national coffee store Farbucks needs to decide in August how many holiday-edition insulated coffee mugs to order.

Content and accuracy of media journalism : What economic and social factors influence content and accuracy of media journalism and other sources of information about society and government?

As winner of a competition : As winner of a competition, you can choose one of the following prizes. If the interest rate is 12%, which is the most valuable prize?

What is the amount of cash that should be collected in march : What is the amount of cash that should be collected in March? How many units of Product A must be produced during the year?

User Account

All Pages