Question
In: Finance
A callable bond pays annual interest of $5, has a par value of $100, matures in...
A callable bond pays annual interest of $5, has a par value of $100, matures in 10 years but is callable in 5 years at a price of $110, and has a value today of $106. Calculate the yield to call.
5.18%
5.27%
5.39%
5.58%
Solutions
Expert Solution
Answer:5.39%
The Yield to call can be computed using the excel function=RATE()
Here the number of years to call =5
The Face Value=$100,callable price=$110 The price of the bond =$106
The bond has a coupon payment(annual)of $5
The Yield to Call can be computed using the formula=RATE(5,B4,-B6,B1) we get YTC as 5.39%
jeff jeffy answered 2 years agoRelated Solutions
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