1. Consider the following semiannual bond: Coupon rate = 6.5% Maturity = 30 years Par value = $1,000 Market price = $1,050 Can be called in 10 years at $1,032.5 Can be called in 15 years at par Only put date in 20 years and putable at par value (1) What is the yield to maturity for this bond? (1 point) PMT = $1,000 x 6.5%/2 = $32.5 N = 30*2 = 60 PV = -$1,050 FV = $1,000 I/Y = 3.07% YTM = 2*I/Y = 6.14% (2) What is the yield to first call? (1.5 point) PMT = 32.5 N = 10*2 = 20 PV = -$1,050 FV = $1,032.5 I/Y = First YTC = 2*I/Y = (3) What is the yield to second call? (1.5 point) PMT=32.5 N=15*2 = 30 PV = $1,050 FV = $1,000 I/Y = First YTC = 2*I/Y = (4) What is the yield to worst for this bond? (2 points) PMT=32.5 N=20*2 = 40 PV = $1,050 FV = $1,000 I/Y= First YTC = 2*I/Y = YTW = lowest yield possible = 1. Consider the following semiannual bond: Coupon rate = 6.5% Maturity = 30 years Par value = $1,000 Market price = $1,050 Can be called in 10 years at $1,032.5 Can be called in 15 years at par Only put date in 20 years and putable at par value (1) What is the yield to maturity for this bond? (1 point) PMT = $1,000 x 6.5%/2 = $32.5 N = 30*2 = 60 PV = -$1,050 FV = $1,000 I/Y = 3.07% YTM = 2*I/Y = 6.14% (2) What is the yield to first call? (1.5 point) PMT = 32.5 N = 10*2 = 20 PV = -$1,050 FV = $1,032.5 I/Y = First YTC = 2*I/Y = (3) What is the yield to second call? (1.5 point) PMT=32.5 N=15*2 = 30 PV = $1,050 FV = $1,000 I/Y = First YTC = 2*I/Y = (4) What is the yield to worst for this bond? (2 points) PMT=32.5 N=20*2 = 40 PV = $1,050 FV = $1,000 I/Y= First YTC = 2*I/Y = YTW = lowest yield possible =