Reference no: EM131933049
Please Show work I'm getting the wrong answer in excel according to the answer solution in back of the book.
1. Zetia Corporation sold a 25-year, 12% annual coupon bond at a par value of $1,000 in April 2007. In April 2017, the bond's yield to maturity (YTM) is 10%. What is the value or Present Value or Vb of the bond?
Present Value = pv(rate, nper,pmt,fv)
2. Now assume the same bond as above but with semiannual interest payments. What is the value or (PV) or (Vb) of the bond.
Present Value = pv(rate, nper,pmt,fv)
3. Yield to Maturity - you are offered a 20 year, 6% annual coupon bond with a face or par value of $1,000 at a price, today, of $1,088.75. What rate of interest would you earn if you bought the bond and held it until maturity? That is, what is the YTM?
4. Yield to Call - Five years ago, Wyatt Corporation sold a 25-year bond issue with a 12% annual coupon rate and an 6% call premium. TODAY, they called the bonds. The bonds were originally sold at their face or par value of $1,000. Compute the realized rate of return, I/Y, for an investor who purchased the bond WHEN it was issued and who surrenders it today at the CALL price.
5. Yield to Maturity - you just purchased a bond which matures in eight years. The bond has a face value of $1,000 and a 6.25% annual coupon rate. The bond has a Current Yield of 7.29%. What is the YTM?
6. On April 1, 2017, you will consider the purchase of an outstanding bond that was issued on April 1, 2015. It has a 9.5% annual coupon, paid semiannually, and has a 30 year original maturity, that is, matures March 31, 2045. There are five years of call protection, through March 31, 2020, at which time it can be called in at 110%. Interest rates have declined since it was issued, and it is now selling for 115.875% of its par value of $1,000.
What is the nominal YTM on this semiannual, 9.5% coupon bond? Show work 5 points
7. What is the nominal YTC on this semiannual, 9.5% coupon bond? Show work 5 points
8. If you decide to purchase the bond April 1, 2017, which return would you expect to earn, the YTM or YTC? Why?? 3 points
9. What is the current yield, _________%, and is it a capital gain or capital loss. Circle gain or loss. Show work.