Question

A bond has 1,000 par value , 17 years to maturity and pays a coupon of 5.25 per year semi annually. The bond is callable in 7 years at 105% of its par value. if the blnfs yield to call is 5.06% per year, what is its annual yield to maturity

Answer 1

Price of the bond today

Period	CF	[email protected]%	Disc CF
1	$      26.25	0.9753	$      25.60
2	$      26.25	0.9513	$      24.97
3	$      26.25	0.9278	$      24.35
4	$      26.25	0.9049	$      23.75
5	$      26.25	0.8826	$      23.17
6	$      26.25	0.8608	$      22.60
7	$      26.25	0.8395	$      22.04
8	$      26.25	0.8188	$      21.49
9	$      26.25	0.7986	$      20.96
10	$      26.25	0.7789	$      20.45
11	$      26.25	0.7597	$      19.94
12	$      26.25	0.7409	$      19.45
13	$      26.25	0.7227	$      18.97
14	$      26.25	0.7048	$      18.50
14	$ 1,050.00	0.7048	$    740.08
Price of the bond	$1,046.33

YTM

Period	CF	PVF @2%	Disc CF	PVF @2.5%	Disc CF
0	$ -1,046.33	1.0000	$ -1,046.33	1.0000	$ -1,046.33
1	$        26.25	0.9804	$        25.74	0.9756	$        25.61
2	$        26.25	0.9612	$        25.23	0.9518	$        24.99
3	$        26.25	0.9423	$        24.74	0.9286	$        24.38
4	$        26.25	0.9238	$        24.25	0.9060	$        23.78
5	$        26.25	0.9057	$        23.78	0.8839	$        23.20
6	$        26.25	0.8880	$        23.31	0.8623	$        22.64
7	$        26.25	0.8706	$        22.85	0.8413	$        22.08
8	$        26.25	0.8535	$        22.40	0.8207	$        21.54
9	$        26.25	0.8368	$        21.96	0.8007	$        21.02
10	$        26.25	0.8203	$        21.53	0.7812	$        20.51
11	$        26.25	0.8043	$        21.11	0.7621	$        20.01
12	$        26.25	0.7885	$        20.70	0.7436	$        19.52
13	$        26.25	0.7730	$        20.29	0.7254	$        19.04
14	$        26.25	0.7579	$        19.89	0.7077	$        18.58
15	$        26.25	0.7430	$        19.50	0.6905	$        18.12
16	$        26.25	0.7284	$        19.12	0.6736	$        17.68
17	$        26.25	0.7142	$        18.75	0.6572	$        17.25
18	$        26.25	0.7002	$        18.38	0.6412	$        16.83
19	$        26.25	0.6864	$        18.02	0.6255	$        16.42
20	$        26.25	0.6730	$        17.67	0.6103	$        16.02
21	$        26.25	0.6598	$        17.32	0.5954	$        15.63
22	$        26.25	0.6468	$        16.98	0.5809	$        15.25
23	$        26.25	0.6342	$        16.65	0.5667	$        14.88
24	$        26.25	0.6217	$        16.32	0.5529	$        14.51
25	$        26.25	0.6095	$        16.00	0.5394	$        14.16
26	$        26.25	0.5976	$        15.69	0.5262	$        13.81
27	$        26.25	0.5859	$        15.38	0.5134	$        13.48
28	$        26.25	0.5744	$        15.08	0.5009	$        13.15
29	$        26.25	0.5631	$        14.78	0.4887	$        12.83
30	$        26.25	0.5521	jeff jeffy Next > < Previous Related Solutions A bond has a $1,000 par value, 14 years to maturity, and pays a coupon of... A bond has a $1,000 par value, 14 years to maturity, and pays a coupon of 8.25% per year, annually. You expect the bond’s yield to maturity to be 7.0% per year in five years. If you plan to buy the bond today and sell it in five years, what is the most that you can pay for the bond and still earn at least a 9.0% per year return on your investment? A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid annually.... A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid annually. What is the value of the bond if your required rate of return is 5%? 2. A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid semi-annually. 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