Atlantis Fisheries issues zero coupon bonds on the market at a price of $513 per

Question

Atlantis Fisheries issues zero coupon bonds on the market at a price of $513 per bond. These are callable in 5 years at a call price of $570. Using semiannual compounding, what is the yield to call for these bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Atlantis Fisheries issues zero coupon bonds on the market at a price of $513 per bond. These are callable in 5 years at a call price of $570. Using semiannual compounding, what is the yield to call for these bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Ans-

Yield to call=(C+F-P/N)/F+P/2

where c =coupon interset 0

F=face value $570

P=market price $513

N=no of years maturity 5

Yield to call=(0+570-513/5)/570+513/2

=11.4/541.5

=0.021053

=2.11 percent

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