Question
A 20-year maturity, 5% coupon bond paying coupons semiannually is callable in ten years at a call price of $1,050. The bond currently sells at
A 20-year maturity, 5% coupon bond paying coupons semiannually is callable in ten years at a call price of $1,050. The bond currently sells at a yield to maturity of 4% (2%per half-year). Assume the face value is $1,000.
(a) What is the bond price given the YTM?
(b) What is the yield to call based on the price computed in part (a)?
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
8th edition
013342362X, 978-0133423624
