Assume a bond with the following parameters: What is it's Yield to Maturity? Par Value $1,000 Call Premium $75 Coupon Rate 6.00% Payments are Made Semi-Annually Years to Maturity 20 Years to Call...

Question

Question

Assume a bond with the following parameters: What is it's Yield to Maturity?

Par Value $1,000

Call Premium $75 Coupon

Rate 6.00%

Payments are Made Semi-Annually

Years to Maturity 20

Years to Call 10

Current Market Price $1,200

Answer 1

Answer #1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =20x2

1200 =∑ [(6*1000/200)/(1 + YTM/200)^k] + 1000/(1 + YTM/200)^20x2

k=1

YTM% = 4.48

Answer 2

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