Question

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?

Answer #1

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**Answer:**

a) **8.0003%**

b) **9.0027%**

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What is the yield to maturity if interest is paid
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