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In: Finance

General Electric has just issued a callable​ (at par)​ 10-year, 6.0% coupon bond with annual coupon...

General Electric has just issued a callable​ (at par)​ 10-year, 6.0% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $102.00.

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 Yield to maturity as follows:

YTM is 5.73%.

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b.

Calculate the Yield to call as follows:

YTC 3.92%.

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c.

Yield to worst is lowest Yield

Answer: 3.92%.

jeff jeffy answered 6 months ago
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