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Unformatted text preview: Becky Hicks 1. Currently, the bond market requires a return of 11.6 percent on the 10-year bonds issued by Winston Industries. The 11.6 percent is referred to as which one of the following? yield to maturity is the same as a return, so the 11.6 refers to the yield of maturity. The only other rate it could be would be the coupon rate but that would clearly state that is it the coupon rate. The yield-to-maturity on a bond is the interest rate you earn on your investment if interest rates do not change. If you actually sell the bond before it matures, you realized return is known as the holding period yield. 7. Oil Well Supply offers 7.5 percent coupon bonds with semiannual payments and a yield to maturity of 7.68 percent. The bonds mature in 6 years. What is the market price per bond if the face value is $1,000? B. $991.47 .075*1000=75 PMT = 75/2=37.5 N=6 years*2=12 I/Y=.0768*2=.1563 Fv=1000 with using the calculator and plugging these numbers in the PV ends up to be $991.47 CPT PV = 991.47 8. Roadside Markets has a 6.75 percent coupon bond outstanding that matures in 10.5 years. The bond pays 8....
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- Spring '11
- Interest, market price, Becky Hicks