Boeing Corporation has just issued a callable at par) three-year, 5.3% coupon bond with semi-annual coupon...

Question

Question

Boeing Corporation has just issued a callable at par) three-year, 5.3% coupon bond with semi-annual coupon payments. The bond

Answer 1

Answer #1

a)
FV = 100
PV = 99.49
Nper = 3 * 2 = 6
PMT = 100 * 5.3% / 2 = 2.65

Yield to maturity can be calculated by using the following excel formula:
=RATE(nper,pmt,pv,fv)*2
=RATE(6,2.65,-99.49,100)*2
= 5.49%

Yield to maturity = 5.49%

b)

FV = 100
PV = 99.49
Nper = 2 * 2 = 4
PMT = 2.65

Yield to call can be calculated by using the following excel formula:
=RATE(nper,pmt,pv,fv)*2
=RATE(4,2.65,-99.49,100)*2
= 5.57%

Yield to call = 5.57%

c)
Yield to worst is the lowest of yield to maturity and yield to call.
Thus, Yield to worst = 5.49%

Answer 2

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