A firm's bonds have a maturity of 8 years with a $1,000 face value, have an...

A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 4 years at $1,146.32, and currently sell at a price of $1,269.54. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.

Solutions

Expert Solution

Semi Annual Coupon =11%*1000/2 =55
Number of Periods =8*2 =16
Par Value =1000
Price of Stock =1269.54
YTM using financial Calculator
N=16;PMT=55;PV=-1269.54;FV =1000;CPT I/Y =3.31%
YTM =2*3.31% =6.62%

Semi Annual Coupon =11%*1000/2 =55
Number of Periods of Call=4*2 =8
Par Value =1000
Call Value =1146.32
Price of Stock =1269.54
YTM using financial Calculator
N=8;PMT=55;PV=1269.54;FV =-1146.32;CPT I/Y =3.2568%
YTC =2*3.2568% =6.51%

jeff jeffy answered 2 years ago

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