Consider the following bond: Coupon rate = 11% Maturity = 18 years Par value = $1,000 First par call in 13 years Only put date

Question

31 users unlocked this solution today!

Consider the following bond:

Coupon rate = 11%

Maturity = 18 years

Par value = $1,000

First par call in 13 years

Only put date in five years and putable at par value

Suppose that the market price for this bond $1,169.

(a) Show that the yield to maturity for this bond is 9.077%.

(b) Show that the yield to first par call is 8.793%.

(c) Show that the yield to put is 6.942%.

(d) Suppose that the call schedule for this bond is as follows:

Can be called in eight years at $1,055

Can be called in 13 years at $1,000

And suppose this bond can only be put in five years and assume that the yield to first par call is 8.535%.What is the yield to worst for this bond?