It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has an 8% annual coupon and had a 30-year original maturity. (It matures on December 31, 2048.) There is 5 years of call protection (until 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 119.12% of par, or $1,191.20. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % 6.53 What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. 5.03 %
It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has an 8% annual coupon and had a 30-year original maturity. (It matures on December 31, 2048.) There is 5 years of call protection (until 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 119.12% of par, or $1,191.20. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % 6.53 What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. 5.03 %
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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Transcribed Image Text:It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was
issued on January 1, 2019. It has an 8% annual coupon and had a 30-year original maturity. (It
matures on December 31, 2048.) There is 5 years of call protection (until 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 119.12% of par, or $1,191.20.
a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to
two decimal places.
6.53
%
What is the yield to call? Do not round intermediate calculations. Round your answer to two
decimal places.
5.03 * %
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