Question

In: Finance

Boeing Corporation has just issued a callable​ (at par)​ three-year, 4.7 % coupon bond with​ semi-annual...

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 $98.65.

a. What is the​ bond's yield to​ maturity?

b. What is its yield to​ call?

c. What is its yield to​ worst?

Solutions

Expert Solution

a.

Calculate the YTM as follows:

Semiannual rate is 2.5958789%.

YTM is 2.5958789%*2 = 5.19%.

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Calculate the YTC as follows:

Semiannual rate is 2.710677%

Yield to call is 2.710677%*2 = 5.42%.

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Worst: Which ever is lower = 5.19%.

jeff jeffy answered 1 month ago
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