Consider the following bond: a 19-years $1,000 callable bond with 9 years until the next call date. The call price (the price the firm will need to pay bondholders if it uses its option to call the bond) on the bond is $1,050. The bond pays yearly coupons at a rate of 6.50% and the yield on the bond is 5.75%. Calculate the yield to call on this bond.
Consider the following bond: a 19-years $1,000 callable bond with 9 years until the next call date. The call price (the price the firm will need to pay bondholders if it uses its option to call the bond) on the bond is $1,050. The bond pays yearly coupons at a rate of 6.50% and the yield on the bond is 5.75%. Calculate the yield to call on this bond.
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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Consider the following bond: a 19-years $1,000 callable bond with 9 years until the next call date. The call price (the price the firm will need to pay bondholders if it uses its option to call the bond) on the bond is $1,050. The bond pays yearly coupons at a rate of 6.50% and the yield on the bond is 5.75%. Calculate the yield to call on this bond.
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