mword sowemol/of ontNAIt is now January 1, 2021, and you.are considering the purchase of onoutstanding band that was issued onJanuary 1, 2019. It has a 9%8annual coupon and had a 15-yearoriginal maturity. (It matures on December31, 2033) There is 5 years of callProtection Cuntil December 31, 2023), afterwhich time it can be called at 108-thatis, at 108% of par, or $1,080.Interest rates have declined since itwas issued, and it is now selling at111.55% of par, or $1, 115.50.a) What is the yield to maturity?b) What is the yield to call?ران2/Lind

YTM means total return that buyer will receive between time period the bond is purchased and the…

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a) What is the yield to maturity? b) What is the yield to call?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 12E: On October 1, 2019, Ball Company issued 9% bonds dated October 1, 2019, with a face amount of...

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

m
word sowemol/
of on
t
NA
It is now January 1, 2021, and you.
are considering the purchase of on
outstanding band that was issued on
January 1, 2019. It has a 9%8
annual coupon and had a 15-year
original maturity. (It matures on December
31, 2033) There is 5 years of call
Protection Cuntil December 31, 2023), after
which time it can be called at 108-that
is, at 108% of par, or $1,080.
Interest rates have declined since it
was issued, and it is now selling at
111.55% of par, or $1, 115.50.
a) What is the yield to maturity?
b) What is the yield to call?
ران
2/
Lind

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