A bond is being issued by General Electric Corp. using Merrill Lynch as the lead underwriter. The bond will have a 30 year final. It pays interest semi-annually and is both callable at 101% in 5 years and has a sinking fund that will retire 2% of the original amount outstanding beginning in Year 3 and operating every year until maturity. With the coupon on the bond set at 8.25%, what is the market yield on the security if it is initially offered at Par ?

A bond is being issued by General Electric Corp. using Merrill Lynch as the lead underwriter. The bond will have a 30 year final. It pays interest semi-annually and is both callable at 101% in 5 years and has a sinking fund that will retire 2% of the original amount outstanding beginning in Year 3 and operating every year until maturity. With the coupon on the bond set at 8.25%, what is the market yield on the security if it is initially offered at Par ?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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