FREE Trial

1. What is the YTM for this Proctor & Gambles corporate bond? 2. What is the coupon...

Question:

1. What is the YTM for this Proctor & Gamble’s corporate bond?

2. What is the coupon yield of this bond over the next year?

3. If your required rate of return for a bond of this risk-class is 6.2 %, what value do you place on this Proctor & Gamble bond?

4. At this required rate of return of 6.2 % are you interested in purchasing this bond?

5. If you purchased this Proctor & Gamble bond for $961.24 yesterday and the market rate of interest for this bond increased to 6.0 % today, do you have a gain or loss? How much is that gain or loss in dollars?

You open your Wall Street Journal (WSJ) on the morning of February 31, 2008, and see the following bond quote for General Mills, Incorporated. Based on this WSJ information, answer the following questions.

1. What is the YTM for this Proctor & Gamble’s
Transcribed Image Text:

Company (ticker) Coupon! Maturity! Last Price! High | Low | Change Yield% Proctor & Gamble CO (PG HD) 5.550% | Mar 2037 | 96.124 | 96.124 | 95.933 | -0.245 | 5.825

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 55% (18 reviews)

1 n 29 Years 2 58 PV 96124 PMT 55502 2775 FV 1000 i YTM 291427 2 YTM 5828...View the full answer


answer-question-section
Answered By
tutor-profile-image
Mercy Kangai
I provide creative and detailed administrative, web search, academic writing, data entry, Personal assistant, Content writing, Translation, Academic writing, editing and proofreading services. I excel at working under tight deadlines with strict expectations. I possess the self-discipline and time management skills necessary to have served as an academic writer for the past seven years. I can bring value to your business and help solve your administrative assistant issues. I have extensive experience in marketing and small business management.
4.80+ 27+ Reviews 86+ Question Solved
Related Book For  book-img-for-question
Introduction to Corporate Finance What Companies Do

Introduction to Corporate Finance What Companies Do

ISBN: 978-1111222284

3rd edition

Authors: John Graham, Scott Smart

See More Books
Question Posted:
See More Questions

Related Video

Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.

Students also viewed these Corporate Finance questions

Entrepreneurs Successes Handle The Challenges Of Entrepreneurship 1st Edition - ISBN: B09ZL9BQY1 - Free Book