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 63 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
Great answer, keep it coming :)

momolu

  • Member
  • Posts: 320
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

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?

The toxic levels for lithium carbonate are close to the therapeutic levels. Signs of toxicity include fine hand tremor, polyuria, mild thirst, nausea, general discomfort, diarrhea, vomiting, drowsiness, muscular weakness, lack of coordination, ataxia, giddiness, tinnitus, and blurred vision.

Did you know?

A strange skin disease referred to as Morgellons has occurred in the southern United States and in California. Symptoms include slowly healing sores, joint pain, persistent fatigue, and a sensation of things crawling through the skin. Another symptom is strange-looking, threadlike extrusions coming out of the skin.

Did you know?

Aspirin may benefit 11 different cancers, including those of the colon, pancreas, lungs, prostate, breasts, and leukemia.

Did you know?

Drug-induced pharmacodynamic effects manifested in older adults include drug-induced renal toxicity, which can be a major factor when these adults are experiencing other kidney problems.

Breaking disulfide bonds in proteins Breaking disulfide bonds in proteins
W. A. Rogers’s engraving, “Out of the Game,” showed one injured boy tending to another. It appeared W. A. Rogers’s engraving, “Out of the Game,” showed one injured boy tending to another. It appeared
Main Hall, Trajan's Market Main Hall, Trajan's Market
Stock Market Question Stock Market Question
Stock Market Tracks Growth in GDP Stock Market Tracks Growth in GDP
Iraqi market Iraqi market
Video: Functional zones in a mitochondrion

For a complete list of videos, visit our video library