ou just bought a newly issued bond with a 4% coupon and a 5 year term. If the indenture states that the bond is callable two years from now for a price of $1,050, what is your yield to call? Question 24 options: 5.08% 4.42% 8.81% 6.38%

ou just bought a newly issued bond with a 4% coupon and a 5 year term. If the indenture states that the bond is callable two years from now for a price of $1,050, what is your yield to call? Question 24 options: 5.08% 4.42% 8.81% 6.38%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

You just bought a newly issued bond with a 4% coupon and a 5 year term. If the indenture states that the bond is callable two years from now for a price of $1,050, what is your yield to call?

Question 24 options:

	5.08%
	4.42%
	8.81%
	6.38%

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