This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Ringtones Inc. wishes to issue new bonds but is uncertain how the market would set the yield to ... (Read 20 times)

Caiter2013

  • Hero Member
  • *****
  • Posts: 607
on: Jul 10, 2018
Ringtones Inc. wishes to issue new bonds but is uncertain how the market would set the yield to maturity. The bonds would be 20-year, 7 annual coupon bonds with a 1,000 par value.
 
  The firm has determined that these bonds would sell for 1,050 each. What is the yield to maturity for these bonds?
  A) 7.00
  B) 6.55
  C) 7.35
  D) 6.54

Question 2

The ________ is the interest rate printed on the bond.
 
  A) coupon rate
  B) semiannual coupon rate
  C) yield to maturity
  D) compound rate


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

hugthug12

  • Sr. Member
  • ****
  • Posts: 329
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D
Explanation: D) The answer is found through an iterative (trial and error) process using the bond pricing formula.
Bond Price = PMT  + ;
1,050.00 = 70  + ;
r = 6.54.
MODE = END, P/Y = 1, C/Y = 1
INPUT 20 ? -1,050 70 1,000
KEY N I/Y PV PMT FV
CPT 6.54

Answer to Question 2

Answer: A


Caiter2013

  • Member
  • Posts: 607
Reply 2 on: Jul 10, 2018
Thanks for the timely response, appreciate it

xiaomengxian

  • Member
  • Posts: 311
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Fungal nail infections account for up to 30% of all skin infections. They affect 5% of the general population—mostly people over the age of 70.

Did you know?

More than 150,000 Americans killed by cardiovascular disease are younger than the age of 65 years.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

Over time, chronic hepatitis B virus and hepatitis C virus infections can progress to advanced liver disease, liver failure, and hepatocellular carcinoma. Unlike other forms, more than 80% of hepatitis C infections become chronic and lead to liver disease. When combined with hepatitis B, hepatitis C now accounts for 75% percent of all cases of liver disease around the world. Liver failure caused by hepatitis C is now leading cause of liver transplants in the United States.

Did you know?

Most strokes are caused when blood clots move to a blood vessel in the brain and block blood flow to that area. Thrombolytic therapy can be used to dissolve the clot quickly. If given within 3 hours of the first stroke symptoms, this therapy can help limit stroke damage and disability.

There may become a driveability issue because the gasoline direct-injection injector is exposed to ... There may become a driveability issue because the gasoline direct-injection injector is exposed to ...
the transamination product of tryptophan is decarboxylated to yield indole-3-acetic acid, or auxin the transamination product of tryptophan is decarboxylated to yield indole-3-acetic acid, or auxin
Ionic Bonds: Cations vs. Anions Ionic Bonds: Cations vs. Anions
Important Bonds in Biological Molecules Important Bonds in Biological Molecules
AAC, Inc. is planning to issue $5,000,000 in 180-day maturity notes paying a rate of 12 percent ... AAC, Inc. is planning to issue $5,000,000 in 180-day maturity notes paying a rate of 12 percent ...
Iraqi market Iraqi market
Video: Simple and Double Sugar

For a complete list of videos, visit our video library