This topic contains a solution. Click here to go to the answer

Author Question: Ringtones Inc. wishes to issue new bonds but is uncertain how the market would set the yield to ... (Read 62 times)

Caiter2013

  • Hero Member
  • *****
  • Posts: 607
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
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
Gracias!


AngeliqueG

  • Member
  • Posts: 343
Reply 3 on: Yesterday
Wow, this really help

 

Did you know?

Many medications that are used to treat infertility are injected subcutaneously. This is easy to do using the anterior abdomen as the site of injection but avoiding the area directly around the belly button.

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

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.

Did you know?

Though newer “smart” infusion pumps are increasingly becoming more sophisticated, they cannot prevent all programming and administration errors. Health care professionals that use smart infusion pumps must still practice the rights of medication administration and have other professionals double-check all high-risk infusions.

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.

For a complete list of videos, visit our video library