Question
Three years ago, Jack’s Automotive Jacks issued a 20-year callable bond with a $1,000 maturity value...
Three years ago, Jack’s Automotive Jacks issued a 20-year callable bond with a $1,000 maturity value and an 8.5 percent coupon rate of interest. Interest is paid semiannually. The bond is currently selling for $1,046. * SET TO 4 DECIMAL PLACES*
(a) What is the bond’s yield to maturity?
(b) If the bond can be called in four years for a redemption price of $1,089, what is the bond’s yield to call?
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Answer #1
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Answer:
a) 8.0003%
b) 9.0027%
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