Four Years ago Messy House Painting issued a 20-year bond with a $1000 maturity value and a 4 percent coupon rate of interest. Interest is paid semiannually. The bond is currently selling for $714. (a) What is the bond’s yield to maturity? (b) If the bond can be called in three years for a redemption price of $1,016, what is the bond’s yield to call?
Four Years ago Messy House Painting issued a 20-year bond with a $1000 maturity value and a 4 percent coupon rate of interest. Interest is paid semiannually. The bond is currently selling for $714. (a) What is the bond’s yield to maturity? (b) If the bond can be called in three years for a redemption price of $1,016, what is the bond’s yield to call?
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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Four Years ago Messy House Painting issued a 20-year bond with a $1000 maturity value and a 4 percent coupon rate of interest. Interest is paid semiannually. The bond is currently selling for $714. (a) What is the bond’s yield to maturity? (b) If the bond can be called in three years for a redemption price of $1,016, what is the bond’s yield to call?
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