The bond yield to maturity and yield to call. Introduction: A yield to maturity (YTM) is the rate of return that is projected for a security or a bond which is apprehended till its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it liken the current estimation of a bond’s future cash flow to its present market cost. A coupon payment is the yearly interest payment that is remunerated to a bondholder by the issuer of the bond until the point where the debt obligation matures. The coupon payments are cyclic payments of interest to the bondholders.

Question

Want to see the full answer?

Answer 1

Question

Chapter 24, Problem 12P

Summary Introduction

To determine: The bond yield to maturity and yield to call.

Introduction: A yield to maturity (YTM) is the rate of return that is projected for a security or a bond which is apprehended till its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it liken the current estimation of a bond’s future cash flow to its present market cost.

A coupon payment is the yearly interest payment that is remunerated to a bondholder by the issuer of the bond until the point where the debt obligation matures. The coupon payments are cyclic payments of interest to the bondholders.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

a. Nestle has just issued a callable (at par) six-year, 7.5% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $105 per $100 face value, implying a yield to maturity of 6.47%. What is the bond's yield to call? b. When would an issuer redeem a callable bond? Hope to have a detailed calculation process. must with a like

Boeing Corporation has just issued a callable (at par) three-year, 4.7% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99.17. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst? a. What is the bond's yield to maturity? The bond's yield to maturity is%. (Round to two decimal places.) b. What is its yield to call? The yield to call is %. (Round to two decimal places.) c. What is its yield to worst? The yield to worst is%. (Round to two decimal places.)

Boeing Corporation has just issued a callable (at par) three-year, 4.9% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99.04. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst? a. What is the bond's yield to maturity? The bond's yield to maturity is %. (Round to two decimal places.)