The current price of the bond can be derived from the yield to maturity. Using your calculator, set: n 40 (semiannual periods); PMT $45 per period; FV $1,000; i 4% per semiannual period. Calculate present value as $1,098.96. Now we can calculate yield to call. The time to call is fi ve years, or 10 semiannual periods. The price at which the bond will be called is $1,050. To fi nd yield to call, we set: n 10 (semiannual periods); PMT $45 per period; FV $1,050;

PV $1,098.96. Calculate the semiannual yield to call as 3.72%.

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