To calculate the number of years until maturity, assume that it is currently Jan

Question

To calculate the number of years until maturity, assume that it is currently January 15, 2013.

What is the yield to maturity for the bond issued by Xenon, Inc.? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Company
(Ticker) Coupon Maturity Last
Price Last
Yield EST $ Vol
(000’s)   Xenon, Inc. (XIC) 6.70    Jan 15, 2033      94.313        ??        57,375         Kenny Corp. (KCC) 7.25    Jan 15, 2030      ??           6.28       48,954         Williams Co. (WICO) ??      Jan 15, 2039      94.865        7.10       43,815      

Explanation / Answer

1) Calculation of yield to maturity of xenon,Inc :

Yield to maturity

= Coupon int+(Face value - Market price)/No.of years to maturity / (Face value+market price/2)

= 6.7+(100-94.313)/20 / (100+94.313)/2

= 6.7+0.28435 / 97.1565

= 6.98435/97.1565

= 7.19%

Assumption : It was assumed that bonds face value is $100.

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