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%.
-------------------------------------------------------
Calculate the YTC as follows:
Semiannual
rate is 2.710677%
Yield to call is 2.710677%*2 = 5.42%.
---------------------------------------------------------------------------
Worst: Which ever is lower = 5.19%.
jeff jeffy answered 3 months agoRelated Solutions
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