A 6.05 percent coupon bond with 18 years left to maturity can be called in six years. The call premium is one year of coupon payments.It is offered for sale at $1,085.50. What is the yield to call of the bond? (Assume interest payments are semiannual.) (Round youranswer to 2 decimal places.)

Par value = $ 1000 Coupon rate = 6.05% Semi annual coupon amount = 1000*0.0605/2 = $ 30.25 Years to…

Answered: A 6.05 percent coupon bond with 18…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A 6.05 percent coupon bond with 18 years left to maturity can be called in six years. The call premium is one year of coupon payments. It is offered for sale at $1,085.50. What is the yield to call of the bond? (Assume interest payments are semiannual.) (Round your answer to 2 decimal places.)