The Bonsai Nursery Corporation has $1,000 par value bonds with a coupon rate of 8% per year making semiannual coupon payments
If there are twelve years remaining prior to maturity and these bonds are selling for $876.40, what is the yield to maturity for these bonds?
A) 9.80%
B) 8.00%
C) 9.77%
D) 8.33%
Answer: C
Explanation: C) The answer is found through an iterative (trial and error) process using the bond pricing formula. Bond Price = PMT × + ;
$876.40 = $40 × + ;
r = 4.885817%
YTM = 4.885817% × 2 = 9.77%.
MODE = END, P/Y = 2, C/Y = 2
INPUT 24 ? -876.40 40 1,000
KEY N I/Y PV PMT FV
CPT 9.77
You might also like to view...
Which of the following best explains why an MPR professional would exclude executive photos from a press kit?
A) MPR professionals hesitate to reveal personal information about employees through media outlets. B) The precise quality and formatting needed for print media is difficult to achieve. C) Personal photographs often suggest a lack of depth and credibility for an organization. D) MPR professionals want to avoid prejudgment of an executive's abilities based on appearance. E) Legal concerns about copyright infringements for an organization are too significant.
Motion picture companies supported the development and worldwide licensing of the_____, which enables a DVD player or a computer drive to decrypt, unscramble, and play back motion pictures on DVDs, but not copy them
a. Time Warner Cable system b. RIAA c. DeCSS d. Content Scramble System (CSS)
As diversification increases, the total variance of a portfolio approaches
A. 0. B. 1. C. the variance of the market portfolio. D. infinity. E. None of the options are correct.
Low levels of stress lead to optimal performance.
a. true b. false