Question

YTM: 7.09%, 9.23%, 7.93%,8.55%

YTC: 9.89%, 7.36%, 8.55%, 7.09%

9.23%,8.55%,7.36%,7.09%

Consider the case of Eades Corp.: Eades Corp. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $980.35. However, Eades Corp. 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 Eades Corp.'s bonds? Value YTM YTC If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Eades Corp.'s bonds? 8 years © 18 years 13 years 10 years If Eades Corp. issued new bonds today, what coupon rate must the bonds have to be issued at par?

Answer 1

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| 0 = a = 3 3 4 5 w ? v ENG 04:05 15-02-2020 26 A845 X fix А 824 825 826 827 828 FACE VALUE COUPON COUPON ($) YEARS CURRENT PRICE CALLABLE IN : YEARS CALLABLE IN 8 YEARS AT 1000 9% 90 18 980.35 829 830 831 YTM 1060 9.23% (=RATE(C827,-C826,C828,-C824)] 9.89% (=RATE(C829,-C826,C828,-C830)] 832 YTC 833 834 AS YTM <YTC, BONDS WILL BE CALLED IN 18 YEARS 835 836 ANSWER BEST ESTIMATE OF THE REMAINING LIFE LEFT = 18 YEARS 837 YTM IS THE RATE WHICH WILL BE APPLICABLE RATE COUPON RATE = 9.23% 838 ANSWER 839 840 841 842 843 844 845 846 847 YIELD SPOT AFN BANKING NOTE Sheet251 53 CLEAN PRICE $10 BIDDING, UNDERWRITING EUAC AW LIFE LP, IP, MRP, INFLATION WARR... →