Question

A bond that settles on June 7, 2016, matures on July 1, 2036, and may be called at any time after July 1, 2026, at a price of 126. The coupon rate on the bond is 6.2 percent and the price is 146.50. What are the yield to maturity and yield to call on this bond? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Yield to maturity?

yield to call?

Answer 1

Following information are provided in the question:

Settlement Date = 7th June 2016

Maturity Date = 1st July 2036

Callable Date = 1st July 2026

Callable Price = $126

Coupon rate = 6.2%

Price = $146.5

Yield can be found using excel formula =YIELD as follows

=YIELD(settlement date,maturity date,rate,pr,redemption,frequency)

Thus, Yield to Maturity = 3.06%

Yield to Call = 3.02%