Bond yields One year ago Clark Company issued a 10-year, 13% semiannual coupon b

Question

Bond yields One year ago Clark Company issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065, and it now sells for $1,200. What is the bond's nominal yield to maturity? Round your answer to two decimal places. What is the bond's nominal yield to call? Round your answer to two decimal places. Would an investor be more likely to earn the YTM or the YTC? What is the current yield? Round your answer to two decimal places.

Explanation / Answer

a)

Yield to maturity is as follows:

Yield to call is as follows:

b)

Current yield is as follows:

Current year interest/Market price

=[1000*13%*6/120]/1200

=65/1200*100

=5.41%

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