1) What is the yield to maturity of the following bond? Coupon 9% Maturity date
ID: 2713619 • Letter: 1
Question
1) What is the yield to maturity of the following bond?
Coupon 9%
Maturity date 2027
Interest paid semiannually
Par Value $1000
Market price $955.00
What is the excel formula to solve this?
Also, What is the current yield of bond?
2. The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm? What is the excel formula to solve this?
3. What should a zero coupon bond maturing for $1000 in 9 years with a 7% market rate sell for? Please solve in excel formula
4. Preferred stock has a dividend of $12 per year. The required return is 6%. What should the price per share be? Please solve in excel.
Thank You!
Explanation / Answer
1)
Current yield:
= Annual coupon payments÷Bond price
= $90÷$955
= 9.42%
Face value (FV) $ 1,000.00 Coupon rate 9.00% Number of compounding periods per year 2 Interest per period (PMT) 45.00 Bond price (PV) $ (955.00) Number of years to maturity 12 Number of compounding periods till maturity (N) 24 Bond Yield to maturity RATE(NPER,PMT,PV,FV)*2 Bond Yield to maturity (Rd) 9.64%Related Questions
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