Author Question: Rogue Outfitters Inc. has outstanding 1,000 face value 8 coupon bonds that make semiannual payments, ... (Read 22 times)

Capo · **on:** Jul 10, 2018

Rogue Outfitters Inc. has outstanding 1,000 face value 8 coupon bonds that make semiannual payments, and have 14 years remaining to maturity. If the current price for these bonds is 987.24, what is the annualized yield to maturity?

A) 8.00
B) 8.38
C) 8.15
D) 8.64

Question 2

Rogue Outfitters Inc. has outstanding 1,000 face value 4 coupon bonds that make semiannual payments, and have 10 years remaining to maturity. If the current price for these bonds is 938.57, what is the annualized yield to maturity?

A) 4.78
B) 4.96
C) 5.02
D) 5.13

princessflame2016 · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: C
Explanation: C) The answer is found through an iterative (trial and error) process using the bond pricing formula.
Bond Price = PMT + ;
987.24 = 40 + ;
r = 4.077260
YTM = 4.077260 2 = 8.15.
MODE = END, P/Y = 2, C/Y = 2
INPUT 28 ? -987.24 40 1,000
KEY N I/Y PV PMT FV
CPT 8.15

Answer to Question 2

Answer: A
Explanation: A) The answer is found through an iterative (trial and error) process using the bond pricing formula.
Bond Price = PMT + ;
MODE = END, P/Y = 2, C/Y = 2
INPUT 20 ? -938.57 20 1,000
KEY N I/Y PV PMT FV
CPT 4.78