A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to worst of this bond when it is released

6.32%

Explanation:

This can be calculate using  the YTC using the following equation:

YTC  = (C + (CP - P) / t) / ((CP + P) / 2)   (1)

Where:

YTC = YTW = yield to call  or yield to worst = ?

C = annual coupon  interest payment = bond interest rate * Bond price = 6% * $100 = $6

CP = call price of the bond  = $104

P = price of the bond  = $100

t = time in years remaining until the call date  = 10 - 1 = 9 years

Substituting the values into equation (1), we have:

YTC  = ($6 + ($104 - $100) / 9) / (($104 + $100) / 2)  = 0.0632, or 6.32%

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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