What is yield to maturity

Assignment Help Financial Management
Reference no: EM132070136

It is now January 1, 2018 and you are considering the purchase of an outstanding bond that was issued on January 1, 2016. It has an 8.5% annual coupon and had a 20-year original maturity. (It matures on December 31, 2035.) There is 5 years of call protection (until December 31, 2018), after which time it can be called at 106 - that is, at 106%. of par, or $1060.00. Interest rates have declined since it was issued, and it is now selling at 118.06% of par, or $1,180.60.

What is the yield to maturity?

Reference no: EM132070136

Questions Cloud

How the value of shares is related to the cost of capital : How the value of shares is related to the cost of capital. How to make a successful long-term investment decision.
Considering the purchase of outstanding bond : It is now January 1, 2018 and you are considering the purchase of an outstanding bond that was issued on January 1, 2016.
What price would you be willing to pay for the bond : What price would you be willing to pay for the bond if your discount rate is 5%?
Portfolio minus the amount you paid for the portfolio : Profits equal the amount you receive at the expiration date for cashing out your portfolio minus the amount you paid for the portfolio.
What is yield to maturity : It is now January 1, 2018 and you are considering purchase of outstanding bond that was issued on January 1, 2016. What is the yield to maturity?
What is the best public financing alternatives : what is the impact on a small family business public view, what's the best public financing alternatives? what's is the financial reporting effects?
Npv considers cash flows and not accrual accounting : NPV considers cash flows and not accrual accounting.
Return on your investment : How much do you have to invest today to have $15,000 in 3 years if you can get 9% return on your investment?
Exculpatory agreement-what could they do to hedge : An exculpatory agreement. ABC is worried about an increase in three-month LIBOR 3 months from now. What could they do to hedge?

Reviews

Write a Review

Financial Management Questions & Answers

  Should a company pursue price hike or focus

Should a company pursue price hike or focus on increasing sales volume

  Part of replicating portfolio for the apple call option

How much risk-free borrowing is necessary as part of the “replicating portfolio” for the Apple call option?

  What would be the three-year forward rate in turkish lira

The inflation rate in the United States is 1%, and the inflation rate in Turkey is 14%. What would be the 3-year forward rate in Turkish lira?

  Your portfolio correspond to your personal risk tolerance

How would you rate your portfolio ( i.e. conservative moderate or aggressive)? Does the risk level of your portfolio correspond to your personal risk tolerance?

  What is present value of its growth opportunities

Sisters Corp expects to earn $7 per share next year. The firm’s ROE is 14% and its plowback ratio is 60%. If the firm’s market capitalization rate is 10%. Calculate the price with the constant dividend growth model. Calculate the price with no growth..

  Balanced scorecard that inform financial decision making

Identify and explain the key areas of the Balanced Scorecard that inform financial decision making.

  Important goal for healthcare organizations

We learned that market share is an important goal for healthcare organizations. What are some examples of how market share may be improved, or increased?

  What is the gain-loss per contract on the position

Suppose you purchase a call contract on a T-bond with an exercise price of 102 16/32 . The bond represents $100,000 of bond principal, and has a premium of $1,000. If the actual T-bond price falls to 100, what is the gain/loss per contract on the pos..

  Effective annual rate-what is the duration of the bond

A CD matruing after 6 months with a par of one million dollars paying an interest rate of 1.5% annually, will have an Effective Annual Rate (EAR) of: A bond has 2 year maturity with 5% coupon rate paid semiannually. If the current market interest rat..

  Evaluate the financial environment at genesis energy

Describe and evaluate the financial environment at Genesis Energy by using ratio analysis of company. Explain two ways Genesis Energy can improve its strategy.

  Purchased the stock without margin

You purchase 950 shares of 2nd Chance Co. stock on margin at a price of $29. Your broker requires you to deposit $18,500. 1. Suppose you sell the stock at a price of $37. What is your return? What would your return have been had you purchased the sto..

  Accounting breakeven-ignoring the costs of financing

You are pondering starting a company that specializes in high-end bicycles. Your initial investment would be $500,000 for depreciable equipment, which should last 5 years, and your tax rate would be 40%. You could sell a bike for $10,000, assuming yo..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd