A 20-year bond has a current price of $800, a par-value of $1000, a coupon rate...

A 20-year bond has a current price of $800, a par-value of $1000, a coupon rate of 8% and pays quarterly. This bond is callable in 8 years. What is the current YTC of this bond?

Expert Solution

Current Price (P) = $800

Par Value(F)= $1000

time left until maturity(n)quaterly= 20 years = 20*4 =80periods

Coupon interest payment (c) =$1000*(0.084) = $ 20

= 0.025

Hence current YTC of bond = 0.025 * 4 = 0.1 = 10%

jeff jeffy answered 2 years ago

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