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Bond Valuation, Yield Calculations, and Stock Return Analysis: A Comprehensive Financial Assignment

Covers bond valuation, yields, and stock return calculations.

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    Bond Valuation, Yield Calculations, and Stock Return Analysis: A Comprehensive Financial Assignment, page 1Bond Valuation, Yield Calculations, and Stock Return Analysis: AComprehensive Financial AssignmentQUESTION 1ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bondsmakesemi-annual payments. If these bonds currently sell for97% of par value, what is theYTM?Answer11.04 (Calculated through excel formula of YTM)11 (Calculated through YTM formula)YTM =C + F–P / nF+P /2QUESTION 2A bond which sells for less than the face value is called a:debentureperpetuitypar value bonddiscount bondpremium bondQUESTION 3ABC'sbonds have a 9.5percent coupon and pay interest semi-annually. Currently, thebonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What isthe yield to maturity?Answer8.40 % (Calculated through excel formula of YTM)8.44%(Calculated through YTM formula)QUESTION 4You paid $1,016 for a corporate bond that has a 10.3% coupon rate. What is the currentyield?Hint: if nothing is mentioned, then assume par value = $1,000Current Yield= Coupon / Price103/1016 = 10.14%QUESTION 5A discount bond has a yield to maturity that:exceeds the coupon rate.

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    Bond Valuation, Yield Calculations, and Stock Return Analysis: A Comprehensive Financial Assignment, page 2

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