Which bond has current yield that exceeds yield to maturity

Assignment Help Financial Management

Reference no: EM13929514

Determine the current market prices of the following $1,000 bonds if the comparable rate is 10% and answer the following questions.

Be sure you show your work here for the price and current yield and then answer the questions below.

XY 5.25% (interest paid annually) for 20 years

AB 14% (interest paid annually) for 20 years

A. Which bond has a current yield that exceeds the yield to maturity?

B. Which bond may you expect to be called? Why?

C. If CD, Inc., has a bond with a 5.25% coupon and a maturity of 20 years but which was lower rated, what would be its price relative to the XY, Inc., bond? Explain

Reference no: EM13929514

Questions Cloud

Compute the holding period return on the investment : The Treasury bill yield now stands at 8 percent, although it was 7 percent one year ago. A coin dealer has offered to pay you $12,800 for the coin. Compute the holding period return on this investment.

Sales-variable cost and fixed cost : Stellar Company has the following sales, variable cost, and fixed cost. If sales increase by $10,000 then their profit increases/decreases by how much? Sales $50,000 Variable Costs $8,400 Fixed Costs $27,000

What the actual intervals are for your curve : If you have the mean and standard deviation, calculate what the actual intervals are for your curve. Please include any citations regarding where you obtained your data for the curve

The incremental revenues for this situation : Carry-ALL plans to sell 1,300 carriers next year and has budgeted sales of $46,000 and profits of $22,000. Variable costs are projected to be $20 per unit. Michael Co. offers to pay $23,900 to buy 680 units from Carry-ALL. Total fixed costs are $7,00..

Which bond has current yield that exceeds yield to maturity : Determine the current market prices of the following $1,000 bonds if the comparable rate is 10% and answer the following questions. Which bond has a current yield that exceeds the yield to maturity? Which bond may you expect to be called? Why?

Why believe health care spending in united states is so high : In 2013, health spending in the United States exceeded $2.8 trillion, which is approximately 17.9% of the U.S. gross national product (GDP) (Centers for Medicare and Medicaid Services, 2011). Why do you believe health care spending in the United S..

What will be your holding period return on the investment : Six months ago, you purchased a tract of land in an area where a new industrial park was rumored to be planned. If you accept this offer, what will be your holding period return on this investment?

Assuming an equally weighted portfolio including stocks : Assuming an equally weighted portfolio including the following three stocks (MRK, GOOG and XOM), what should one’s required return be for this portfolio using the Capital Asset Pricing Model? Merck & Co. (MRK)- Beta= 0.50 Google Inc. (GOOG)- Beta= 1...

What is the stocks expected price four years from today : A stock is expected to pay a dividend of $4.00 at the end of the year and it should continue to grow at a constant rate of 6% a year. If its required return is 12%, what is the stock’s expected price 4 years from today?

User Account

All Pages