e none of the above 6. A corporate bond matures in years. The value of 51000....

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Answer 1

Answer #1

6]

Yield to call is calculated using RATE function in Excel :

nper = 2 * 2 (number of semiannual coupon payments until call = 2 * 2)

pmt = 1000 / 8% / 2 (semiannual coupon payment = face value * coupon rate / 2)

pv = -1075 (price of bond. This is entered with a negative sign because it is a cash outflow to buy the bond)

fv = 1050 (call price of the bond, receivable when call is made)

RATE is calculated to be 3.17%.

The is the semiannual YTC. To get annual YTC, we multiply this by 2.

YTC = 6.33%.

A10 f =RATE(2*2,1000*8%/2,-1075,1050)*2 D E B C 10 6.33%

Answer 2

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