A 25-year maturity, 8.7% coupon bond paying coupons semiannually is callable in six years at a...
A 25-year maturity, 8.7% coupon bond paying coupons semiannually is callable in six years at a call price of $1,135. The bond currently sells at a yield to maturity of 7.7% (3.85% per half-year).
a. What is the yield to call? (Do not
round intermediate calculations. Round your answer to 2 decimal
places.)
Yield to call %
b. What is the yield to call if the call price is only $1,085? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Yield to call
%
Homework Answers
FV = 1000, PMT = 43.50, rate = 3.85%, N = 50
use PV function in Excel
price = 1110.2282
PV = -1110.2282, FV = 1135, N = 12, PMT = 43.50
use rate funciton in Excel and multiply by 2
a. yield to call = 8.13%
replace FV with 1085 and recalculate rate and multiply by 2
b. yield to call = 7.53%
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