GB550 Unit #3 Assignment YTM & Beta/ FINANICAL MANAGEMENT UNIT #3 BONDS

FINANICAL MANAGEMENT UNIT #3 BONDS GB550-3 Calculate the value of a firm through the use of discounted cash flow analysis. Problems: 1. Complete problem: Yield to Maturity for Annual Payments XZY Corporation’s bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $950. What is their yield to maturity? Show your work. N=14, PV =950, PMT= 10, FV = 1000, CPT=1/Y A bond that pays coupons(s) of 10% per year, that has a market value of 950, and that matures in 14 years will have a yield to maturity of: This assignment was also used in a different formula a yield to maturity calculator. The formula measure a bonds return if we were to buy it today and hold it until it matures. This formula is more simplified to clarify the FV, PV, YTM and percentage of current rate of bond. Face Value = $1,000 (1,000) Annual Coupon Rate = 10% (0.10) Years to Maturity = 14 (14) Coupon Payments per Year = 1 (12 months) Current Bond Price = $950 (950) Calculate = 10.71% = Yield to Maturity (YTM)