Question

Corso Books has just sold a callable bond. It is a thirty-year quarterly bond with an annual coupon rate of 5% and $1,000 par value. The issuer, however, can call the bond starting at the end of 5 years. If the yield to call on this bond is 7% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?

Answer #1

Callable bond. Corso Books has just sold a callable bond. It is
a thirty-year quarterly bond with an annual coupon rate of 5% and
$5,000 par value. The issuer, however, can call the bond starting
at the end of 10 years. If the yield to call on this bond is 7%
and the call requires Corso Books to pay one year of additional
interest at the call (4 coupon payments), what is the bond price
if priced with the assumption...

Corso Books has just sold a callable bond. It is a thirty-year
quarterly bond with an annual coupon rate of 10% and $1000 par
value. The issuer, however, can call the bond starting at the end
of 8 years. If the yield to call on this bond is 9% and the call
requires Corso Books to pay one year of additional interest at the
call (4 coupon payments), what is the bond price if priced with
the assumption that the...

Zero-coupon bond. Wesley Company will issue a zero-coupon bond
LOADING... this coming month. The projected bond yield LOADING...
is 6%. If the par value LOADING... is $5,000, what is the bond's
price using a semiannual convention if
a. the maturity LOADING... is 10 years?
b. the maturity is 40 years?
c. the maturity is 60 years?
d. the maturity is 100 years?
Part B
Callable bond. Corso Books has just sold a callable bond. It is
a thirty-year monthly bond...

IBM has just issued a callable (at par) 10 year, 6% coupon bond
with quarterly coupon payments. The bond can be called at par in
two year or anytime thereafter on a coupon payment date. It has a
price of $97 per $100 face value. What is the bond’s yield to
maturity? What is the bond's yield to call?

Redd Industries has just issued a callable, $1000 par value,
five-year, 5% coupon bond with semiannual coupon payments. The bond
can be called at par in three years or anytime thereafter on a
coupon payment date. If the bond is currently trading for $950.00,
then its yield to maturity is closest to:
Select one:
A. 6.5%
B. 6.18%
C. 6.0%
D. 6.8%
Redd Industries has just issued a callable, $1000 par value,
five-year, 5% coupon bond with semiannual coupon payments....

General Electric has just issued a callable (at par) 10-year,
5.7 % coupon bond with annual coupon payments. The bond can be
called at par in one year or anytime thereafter on a coupon payment
date. It has a price of $ 102.18.
a. What is the bond's yield to maturity?
b. What is its yield to call?
c. What is its yield to worst?

Boeing Corporation has just issued a callable (at par)
three-year, 4.9 % coupon bond with semi-annual coupon payments.
The bond can be called at par in two years or anytime thereafter on
a coupon payment date. It has a price of $ 98.56
a. What is the bond's yield to maturity?
b. What is its yield to call?
c. What is its yield to worst?

A corporate coupon bond of 6.2 percent is callable in five years
for a call premium of one year of coupon payments. Assuming a par
value of $1,000, what is the price paid to the bondholder if the
issuer calls the bond?

1. A $1,000 par value corporate bond that pays $60 annually in
interest was issued at par last year. The current price of the bond
is $996.20.
Pick the correct statement about this bond from below.
The bond is currently selling at a premium.
The current yield exceeds the coupon rate.
The bond is selling at par value.
The current yield exceeds the yield to maturity.
The coupon rate has increased to 7 percent.
2. Dot Inns is planning on...

Suppose Costco Corp.
issued a 15 year bond callable in 3 years at a call price of 1,160;
the bond has annual payments of 8% of its par value of $1,000.
Current bond price is $930.
a. Find the yield to
maturity.
b. Find
the yield to call.
c. Do you think the
issuer is likely to call the bond in 3 years? Why or why not?

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