Atlantis Fisheries issues zero coupon bonds on the market at a price of $334 per
ID: 2760173 • Letter: A
Question
Atlantis Fisheries issues zero coupon bonds on the market at a price of $334 per bond. Each bond has a face value of $1,000 payable at maturity in 14 years. It is callable in 7 years at a call price of $530. Using semiannual compounding, what is the yield to call for these bonds?Atlantis Fisheries issues zero coupon bonds on the market at a price of $334 per bond. Each bond has a face value of $1,000 payable at maturity in 14 years. It is callable in 7 years at a call price of $530. Using semiannual compounding, what is the yield to call for these bonds?
Explanation / Answer
Callable Price = 530
Time = 7 years
We can equate the presnet value
=334 = 530/(1+r)^7
r=6.81%
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