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The market price is $850 for a 19-year bond ($1,000 par value) that pays 12 percent annual interest, but makes interest payments on a semiannual basis
(6 percent semiannually). What is the bond’s yield to maturity?
Pybus, Inc. is considering issuing bonds that will mature in 24 years with an annual coupon rate of 9 percent. Their par value will be $1,000 and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 11.5 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 12.5 percent. What will be the price of these bonds if they receive either an A or a AA rating?
A bond that matures in 10 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market’s required yield to maturity on a comparable-risk bond is 17 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?
The Saleemi Corporation’s $1,000 bonds pay 9 percent interest annually and have 12 years until maturity. You can purchase the bond for $1,115
.
a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent?
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