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1. (15 marks) Hana Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value.
1. (15 marks) Hana Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,120. 1. What is the bonds nominal yield to call (10 marks)? 2. What are the benefits and costs to the company if it issues a call provision? (5 marks)?
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