Question
A 15-year maturity, 7.5% coupon bond paying coupons semiannually is callable in 5 years at a call price of $1,100. The bond currently sells at
A 15-year maturity, 7.5% coupon bond paying coupons semiannually is callable in 5 years at a call price of $1,100. The bond currently sells at a yield to maturity of 6% (3% per half-year).
a. What is the yield to call annually? (Do not round intermediate calculations. Round your answer to 3 decimal places.
b. What is the yield to call annually if the call price is only $1,050? (Do not round intermediate calculations. Round your answer to 3 decimal places.
c. What is the yield to call annually if the call price is $1,100, but the bond can be called in 2 years instead of 5 years? (Do not round intermediate calculations. Round your answer to 3 decimal places.
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