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Suppose Costco Corp. issued a 15 year bond callable in 3 years at a call price...

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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Answer #1

a)

b)

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