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
Related questions
Question
You are interested to invest in bond market. Currently there is a callable bond issued by 3G Corporation with the following information：
Issuer: 3G Corporation : 8%
Coupon rate : 8%
Coupon payment: Semi-annually : $1,000
Nominal value：$1000
Callable period： First par call in 3 years
Offer period: 15 May - 30 May 2022
First par call in 3 years
Value date : 6 June 2022
Maturity date: 6 June 2027
Issuer's credit rating: Moody's rating: BaB, S&P's rating: BBB
Suppose that yield of similar credit rating bond is 6% and trend of interest rate seems to be decline in next 5 years
Required:
a. Compute the
b. Compute the yield to first call.
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