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A company currently has a 12 years bond that is callable in 2 years from today with a call premium of 3%. This bond annual
A company currently has a 12 years bond that is callable in 2 years from today with a call premium of 3%. This bond annual coupon rate is 8% paid semi-annually and it is currently selling at $990 per share. What is the bond annual yield to call and the bond annual yield to maturity? Also, if general interest rate is expected to remains unchanged, based on comparison between yield to call and yield to maturity that you have calculated, do you think is best for this company to call this bond today and why or why not?
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