A company issues a callable (at par) five-year, 7% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $110 per $100 of face value. What is the yield to worst of this bond when it is released?

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
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A company issues a callable (at par) five-year, 7% coupon bond with annual coupon
payments. The bond can be called at par in one year after release or any time after
that on a coupon payment date. On release, it has a price of $110 per $100 of face
value. What is the yield to worst of this bond when it is released?
3.00%
O 1.40%
O4.71%
2.73%
Transcribed Image Text:A company issues a callable (at par) five-year, 7% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $110 per $100 of face value. What is the yield to worst of this bond when it is released? 3.00% O 1.40% O4.71% 2.73%
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