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IBM has just issued a callable (at par) 5 year, 7% coupon bond with quarterly coupon...

IBM has just issued a callable (at par) 5 year, 7% coupon bond with quarterly coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $102 per $100 face value. What is the bond's yield to call?

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Answer #1

Bond's call of yield to call is calculated using the RATE function:-

=RATE(nper,pmt,pv,fv)

=RATE(2*4,7%/4*100,-102,100)*4

=5.93%

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