Price of the bond is calculated as follows:-
=PV(rate,nper,pmt,fv)
=PV(6.5%/2,15*2,8.25%/2*1000,1000)
=1166.09
Yield to call:-
=RATE(nper,pmt,pv,fv)
=RATE(6*2,8.25%/2*1000,-1166.09,1045)*2
=5.59%
You're examining a bond with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and...
Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,045. What is the bond’s nominal yield to call? 6.77% 5.09% 4.42% 5.54% 5.59%
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