Question

A bond pays 12% semiannually coupon and has 8 years remaining to maturity. The face value is 1000$ the bond is callable in 5 years for 1,200$ and has a YTC of 14%

1) Calculate the price of the bond today.

2) What is the required rate of return on the bond?

Answer #1

1)

**Hence, Bond price is $1,031.43**

b)

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