A 30-year maturity. 7.2% coupon bond paying coupons semiannually is callable in

Question

A 30-year maturity. 7.2% coupon bond paying coupons semiannually is callable in five years at a call price of $1,190. The bond currently sells at a yield to maturity of 6.2% (3.10% per half-year). What is the yield to call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % What is the yield to call if the call price is only $1,140? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call % What is the yield to call if the call price is S1,190 but the bond can be called in two years instead of five years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Yield to call %

Explanation / Answer

a)

b)

c)

Face value (FV) $                                         1,000 Coupon rate 7.20% Number of compounding periods per year 2 Interest per period (PMT) $                                               36 Number of years to maturity 30 Number of compounding periods till maturity (NPER) 60 Market rate of return/Required rate of return 6.20% Market rate of return/Required rate of return per period (RATE) 3.10% Bond price PV(RATE,NPER,PMT,FV)*-1 Bond price $                                   1,135.46

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.