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 61 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
:D TYSM

chjcharjto14

  • Member
  • Posts: 342
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Did you know?

More than one-third of adult Americans are obese. Diseases that kill the largest number of people annually, such as heart disease, cancer, diabetes, stroke, and hypertension, can be attributed to diet.

The stability of carbon bonds makes life possible even in extreme environments The stability of carbon bonds makes life possible even in extreme environments
The iron atom of heme has six coordination bonds: four in the plane The iron atom of heme has six coordination bonds: four in the plane
The world has been horrified recently at a U.S. Congress so polarized and paralyzed that it cannot p The world has been horrified recently at a U.S. Congress so polarized and paralyzed that it cannot p
Amide carbonyl and Amide bonds Amide carbonyl and Amide bonds
Reconstruction Drawing of Trajan's Market Reconstruction Drawing of Trajan's Market
Nine $10 000, 4% bonds with interest payable semi-annually and redeemable at par are purchased ... Nine $10 000, 4% bonds with interest payable semi-annually and redeemable at par are purchased ...
Video: Neurotransmission at chemical synapses & Excitory and inhibitory potentials

For a complete list of videos, visit our video library