Yield to maturity on a bond
Yield to Maturity (Definition) | How to Calculate YTM? | Pros ...
The weighted average maturity of a bond’s cash flows needed to recover the cost of the bond. Weights determined by present value of cash flows. Duration depends on three factors. Maturity of the bond. Coupon payments. Current Yield to maturity (discount factor) Need to weight present value of cash flows from bond by time received
[DOCX File]Measuring Yield
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The rate of return earned on a bond if it is held until maturity is known as the yield to maturity (YTM). The YTM for a bond that sells at par consists entirely of an interest yield, but if the bond sells at a price other than its par value, the YTM consists of the interest yield plus a positive or negative capital gains yield.
[DOC File]Chapter 10
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Yield to maturity and bond value--annual bond Answer: d Diff: E. A 20-year bond with a par value of $1,000 has a 9 percent annual coupon. The bond currently sells for $925. If the bond’s yield to maturity remains at its current rate, what will be the price of the bond 5 years from now? a. $ 966.79.
[DOC File]Bond Yields and Prices
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What is the yield to maturity calculated on a bond-equivalent basis? Bond equivalent basis or Bond Equivalent Yield (BEY) is the common way to quote YTM. It is double the period rate. Therefore BEY is a semi-annual APR. Each bond shown in the table below has a …
[DOC File]Tuesday February 27, 2007
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May 30, 2007 · Current yield, capital gains yield, and yield to maturity . Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds. have an 8 percent annual coupon rate and were issued 1 year ago at their par value. of $1,000, but due to changes in interest rates, the bond's market price has fallen to. $901.40. The capital gains ...
[DOC File]Current yield, capital gains yield, and yield to maturity
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The yield curve is considered one of the best ways to price a bond. (F, moderate) A noncallable bond would be expected to have a higher yield to maturity than a comparable callable bond. (F, moderate) The size of yield spreads tends to remain constant over time. (F, moderate) Yield spreads were at their widest during the Great Depression. (T, easy)
[DOC File]Bonds, Study Guide
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YTM = the rate of return earned on a bond if it is held to maturity Current yield = provides information regarding the amount of cash income that will be generated in a given year, but does not provide an accurate measure of the total expected return. 1. A 10 percent semiannual coupon bond matures in 8 …
Chapter 9
Since the bond is selling at par, the yield to maturity on a semi-annual basis is the same as the semi-annual coupon, 4%. The bond equivalent yield to maturity is 8%. Effective annual yield to maturity = (1.04)2 – 1 = 0.0816 = 8.16%
[DOC File]CHAPTER 7
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The longer the maturity of a bond selling at a discount, all else held constant, the lower the price of the bond! Les Company is about to issue a bond with semi-annual coupon payments, a coupon rate of 10% and par value of $1,000. The yield-to-maturity for this bond is 8%. What is the price of the bond if the bond matures in 5, 10, 15, or 20 years?
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