Question
A bond has a maturity of 12 years. Its coupon rate is 8% paid semiannually. Yield to maturity is 10% and yield to call is
A bond has a maturity of 12 years. Its coupon rate is 8% paid semiannually. Yield to maturity is 10% and yield to call is 14%.
a) If the bond is callable any time after 7 years and the current price of the bond is $910, compute the call price.
b) If an investor wants to buy the bond today and sell it after 8 years, how much should he pay for the bond today?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
