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NYU issued a 20 year bond that pays a semi annual coupon of $32.00, has a...

NYU issued a 20 year bond that pays a semi annual coupon of $32.00, has a par value of 1000, and a nominal annual yield-to-maturity of 7.443 percent. This bomd can be called in 5 years, and the nominal annual yield to call is 10.15 percent. Determine the call premium for this bond.

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Expert Solution

Bond purchase price is $892.36

Bond call price is $60

Hence, call premium will be $60 ($1,060-$1,000)

jeff jeffy answered 1 year ago
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