Find the promised yield to maturity for a 9% coupon, $1,000 par 20 year bond selling...

Find the promised yield to maturity for a 9% coupon, $1,000 par 20 year bond selling at $920.56. The bond makes semiannual coupon payments.

a)9.44% b)9.92% c)9.99% d)10.14%

Yield to Call Find the yield to call for a 8% coupon, $1,000 par 15 year bond selling at $1045.50 if the bond is callable in 10 years at a call price of $1,080. The bond makes semiannual coupon payments.

a) 6.88% b) 7.13% c)6.73% d)7.87%

Solutions

Expert Solution

Calculate the promised YTM as follows:

Semiannual yield is 4.9605%.

Promised yield is 4.9605%*2 9.92%.

Option B.

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Calculate the YTC as follows:

Semiannual YTC is 3.9375%.

Annual YTC is 3.9375%*2 7.87%.

Option D.

jeff jeffy answered 4 months ago

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