Suppose that an 8% 10-year bond has the following call stru First callable in 3 years at 1040$ First par call date is in 5 years The price of the bond is 1093.482$ he par value is 1000$ and coupons are paid semiannually. -the vield to first call for this hond 5.2%. 5.6% or 5.8%?

Suppose that an 8% 10-year bond has the following call stru First callable in 3 years at 1040$ First par call date is in 5 years The price of the bond is 1093.482$ he par value is 1000$ and coupons are paid semiannually. -the vield to first call for this hond 5.2%. 5.6% or 5.8%?

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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Question

3. Suppose that an 8% 10-year bond has the following call structure:
First callable in 3 years at 1040$
First par call date is in 5 years
The price of the bond is 1093.482$
The par value is 1000$ and coupons are paid semiannually.
Is the yield to first call for this bond 5.2%, 5.6% or 5.8%?

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