• An 18-year 11% semi-annual coupon bond with facevalue of 1,000 now sells for $1,169• The first call date is 8 years from now. Call price $1,055• Cash flows: 16 coupons of $55 every 6 months + $1,055after 16 periods• N = 16, PV = -1169, PMT=55, FV-1055→ CPTI/Y=4.2675%. The yield to first call is 8.5351%What if the first par call date is 13 years from now?• N =PMT =FV=PV =→ CPT I/Y =The yield to first par call is

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What if the first par call date is 13 years from now? N = PV = PMT= FV ➜ CPT I/Y = = • The yield to first par call is

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

• An 18-year 11% semi-annual coupon bond with face
value of 1,000 now sells for $1,169
• The first call date is 8 years from now. Call price $1,055
• Cash flows: 16 coupons of $55 every 6 months + $1,055
after 16 periods
• N = 16, PV = -1169, PMT=55, FV-1055→ CPT
I/Y=4.2675%. The yield to first call is 8.5351%
What if the first par call date is 13 years from now?
• N =
PMT =
FV
=
PV =
→ CPT I/Y =
The yield to first par call is

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