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%
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
You might also like to view...
Which of the following is true in terms of the relationship between sample size and sample accuracy?
A) There is a linear relationship; the larger the sample, the greater the accuracy. B) There is no relationship; sample size does not affect sample accuracy. C) Accuracy is set by the researcher and is not affected by the sample size. D) After a sample size of about 500, large gains in sample accuracy are not realized--even with large increases in sample size. E) After a sample size of about 1,500, large gains in sample accuracy are not realized--even with large increases in sample size.
Which of the following terms best identifies the function of standard costs where any deviation from standards can be quickly detected and responsibility pinpointed so appropriate action may be taken?
a. Management by exception b. Contribution approach c. Marginal costing d. Standardized accounting system
When a Statement on Auditing Standards uses the word "should" relating to a requirement, it means that the auditor:
A. Should consider whether to follow the advice based on the exercise of professional judgment in the circumstances. B. Must comply with requirements unless the auditor demonstrates and documents that alternative actions are sufficient to achieve the objectives of the standards. C. Must fulfill the responsibilities under all circumstances. D. May choose to change responsibilities relating to various professional standards that remain under consideration.
In theory, mineral rights to land can extend to the center of the earth
Indicate whether the statement is true or false