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IrinaVladis [17]
4 years ago
13

Consider the case of BTR Co.: BTR Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bo

nds have a par value of $1,000, and their current market price is $1,100.35. However, BTR Co. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on BTR Co.’s bonds?
Business
1 answer:
valentinak56 [21]4 years ago
5 0

Answer:

Yield to maturity is 7.93%

Yield to call is  7.83%

Explanation:

I calculated both the yield to maturity and yield to call using the rate formula in excel which is =rate(nper,pmt,pv,-fv)

nper is the year to maturity and year to call of 18 years and 8 years respectively.

pmt is the periodic coupon payment is 9%*1000=$90 in each case.

pv is the present value in each  case of $1100.35

The future value which is the redemption value is $1000 for yield to maturity and $1060 for yield to call

Find attached detailed calculation

Download xlsx
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Answer: Please refer to Explanation

Explanation:

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2. Output Gap.

This is the difference between the Actual GDP and the Potential GDP.

3. Demand Shock

This increases or reduces Aggregate Demand due but only temporarily.

4. Recessionary Gap.

This is where actual GDP falls below Potential GDP.

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6. Self Correction

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3 years ago
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Answer:

True

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3 years ago
Why is compounding interest monthly better than yearly ?
dalvyx [7]

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Answer:

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