A 20-year, 8% annual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.) | ||||||||
Basic Input Data: | ||||||||
Years to maturity: | 20 | |||||||
Periods per year: | 1 | |||||||
Periods to maturity: | 20 | |||||||
Coupon rate: | 8% | |||||||
Par value: | $1,000 | |||||||
Periodic payment: | $80 | |||||||
Current price | $1,100 | |||||||
Call price: | $1,040 | |||||||
Years till callable: | 5 | |||||||
Periods till callable: | 5 | |||||||
a. What is the bond's yield to maturity? | 7.05% | |||||||
b. What is the bond's current yield? | 7.69% | |||||||
d. What is the bond's yield to call? | 7.27% |
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