A bonds yield to maturity (YTM) is the percentage return that it is expected to generate if the bond is assumed to be held until it matures. Calculating a bonds YTM requires you to make several assumptions. Which of the following is one of these assumptions?

(a)The bond has an early redemption feature.

(b)The bond will not be called

Consider the following case of Purple Whale Foodstuffs Inc.:

Purple Whale Foodstuffs Inc. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $980.35. However, Purple Whale Foodstuffs Inc. may call the bonds in eight years at a call price of $1,060.

What are the YTM and yield to call (YTC) on bonds?

Purple Whale Foodstuffs Inc.s bonds have a yield-to-maturity (YTM) of(7.09%/8.82%/6.05%/9.23%/7.36%/7.93%/8.55%)................ and a yield-to-call (YTC) of (9.89%/7.93%/6.05%/8.55%/9.23%/7.09%/8.82%/7.36%)........................

Explanation:

If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Purple Whale Foodstuffs Inc.s bonds?

(a)5 years

(b)13 years

(c)8 years

(d)18 years

Explanation:

If Purple Whale Foodstuffs Inc. issued new bonds today, what coupon rate must the bonds have to be issued at par? (6.05/9.89/7.09/7.93/8.55/9.23/8.82/7.36).............................