95
. Call price--semiannual payment Answer: e Diff: M
Step 1: Find the bond price using the YTM:
Enter the following input data in the calculator:
N = 30; I = 7.5/2 = 3.75; PMT = 0.10/2 1,000 = 50; FV = 1000; and then solve for PV = -$1,222.87. VB = $1,222.87.
Step 2: Solve for the call price:
Enter the following input data in the calculator:
N = 10; I = 5.54/2 = 2.77; PV = -1222.87; PMT = 50; and then solve for FV = $1,039.938 ≈ $1,040.
96. Yield to call Answer: a Diff: M
Step 1: Find the price of the semiannual bond today using the YTM and other information given:
N = 12 2 = 24; I = 7.5/2 = 3.75; PMT = 45; FV = 1000; and then solve for PV = -$1,117.3362. VB = $1,117.3362.
Step 2: Given the bond’s price, calculate the yield to call by entering the following data as inputs:
N = 4 2 = 8; PV = -1117.3362; PMT = 45; FV = 1045; and then solve for I = k/2 = 3.3073% per 6 months
k = 3.3073% 2 = 6.6146% ≈ 6.61%.
97 . Yield to call--annual bond Answer: a Diff: M
First get the price based on the YTM:
N = 12; I = 7.5; PMT = 90; FV = 1000; and then solve for PV =
-$1,116.03. VB = $1,116.03.
Now solve for the YTC:
N = 4; PV = -1116.03; PMT = 90; FV = 1050; and then solve for I = 6.73%.
98 . Yield to call--annual bond Answer: b Diff: M
The bond price today is found as N = 11; I = 7.5; PMT = 80; FV = 1000; and then solve for PV = -$1,036.58. VB = $1,036.58.
Solve for the yield to call as follows: N = 3; PV = -1036.58; PMT = 80; FV = 1060; and then solve for I = 8.41%.
99 . Yield to call--semiannual bond Answer: a Diff: M
Step 1: Determine the stock’s current price:
Use the YTM to find the price today. Enter the following input data in the calculator:
N = 24; I = 7/2 = 3.5; PMT = 90/2 = 45; FV = 1000; and then solve for PV = -$1,160.58. VB = $1,160.58.
Step 2: Determine the bond’s yield to call:
Use the PV found in Step 1 to find the YTC.
Enter the following input data in the calculator:
N = 6; PV = -1160.58; PMT = 90/2 = 45; FV = 1045; and then solve for I = 2.311% per 6 months or 2 2.311% = 4.622% 4.62%.
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