A bond has a $1,000 par value, 12 years to maturity, and an 8% annual coupon and sells for $980. a. What is its yield to maturity (YTM)? Round your answer to two decimal places. % b. Assume that the yield to maturity remains constant for the next 5 years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. $ Madsen Motors's bonds have 15 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 10%; and the yield to maturity is 9%. What is the bond's current market price? Round your answer to the nearest cent. $ Last year Carson Industries issued a 10-year, 14% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,070 and it sells for $1,350. 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. % Would an investor be more likely to earn the YIM or the YTC? -Select b. What is the current yield? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Round your answer to two decimal places % Is this yield affected by whether the bond is likely to be called? 1. If the bond is called, the capital gains yield will remain the same but the current yield will be different. IL. If the bond is called, the current yield and the capital gains yield will both be different. III. If the bond is called, the current yield and the capital gains yield will remain the same but the coupon rate will be different IV. If the bond is called, the current yield will remain the same but the capital gains yield will be different V. If the bond is called, the current yield and the capital gains yield will remain the same Select c. What is the expected capital gains (or loss) Vield for the coming year? Use amounts calculated in above requirements for calculation, if required. Negative value should be indicated by a minus sion, Round your answer to two decimal places. % An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 12% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bonds at its maturity and that 15 more payments are to be made on Bond L a. What will the value of the Bond L be if the going interest rate is 6%? Round your answer to the nearest cent $ What will the value of the Bond S be if the going interest rate is 6%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 9%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 9%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 12%? Round your answer to the nearest cent. S What will the value of the Bond s be if the going interest rate is 12%? Round your answer to the nearest cent
