Atlantis Fisheries issues zero coupon bonds on the market at a price of $492 per

Question

Atlantis Fisheries issues zero coupon bonds on the market at a price of $492 per bond. These are callable in 9 years at a call price of $550. 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 $492 per bond. These are callable in 9 years at a call price of $550. 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

As it is zero coupon bond interest is zero

YTC = FV-BV/2n/FV+BV/2

= 550-492/18/550+492/2

= 3.22*100/521

= .61*2

Yield to call is 1.23%

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