Question

QUESTION 7 IBM has just issued a callable (at par) 5 year, 9% coupon bond with quarterly coupon payments. The bond can be cal

0 0
Add a comment Improve this question Transcribed image text
Answer #1
C =9/4 2.25
n =2*4 8
P 100
Bond Price 102
YTC YTC
Bond price =C*[1-(1+YTM)^-n / YTM] + [P/(1+YTM)^n]
Where,
C= Coupon amount
YTC = Yield to call
n = Number of periods
P= Par value
$102=2.25 * [1 - (1 + YTC)^-8 / YTC] + [100 / (1 + YTC) ^8]
YTC = 1.97% ( for a quarter)
YTC = 1.975*4 = 7.91%
Add a comment
Know the answer?
Add Answer to:
QUESTION 7 IBM has just issued a callable (at par) 5 year, 9% coupon bond with...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT