Question
A company has the following bond outstanding. The bond is callable every year on May 1st, the anniversary date of the bond. The bond has
A company has the following bond outstanding. The bond is callable every year on May 1st, the anniversary date of the bond. The bond has a deferred call with three years left. The call premium on the first call date is one year's interest. The call premium will decline by 10 percent of the original call premium for 10 years. Eleven years from today, the call premium will be zero. Given the following information, what is the yield to worst for this bond?
| Current date: |
| 5/1/2016 |
| Maturity date: |
| 5/1/2036 |
| Price (percent of par): | 104.5 | |
| Coupon rate: |
| 10.00% |
| Par value (percent of par): | 100 | |
| Coupons per year: | 2 | |
| Call date | Call premium |
|
| 5/1/2019 | $ 100.00 |
|
| 5/1/2020 | $ 90.00 |
|
| 5/1/2021 | $ 80.00 |
|
| 5/1/2022 | $ 70.00 |
|
| 5/1/2023 | $ 60.00 |
|
| 5/1/2024 | $ 50.00 |
|
| 5/1/2025 | $ 40.00 |
|
| 5/1/2026 | $ 30.00 |
|
| 5/1/2027 | $ 20.00 |
|
| 5/1/2028 | $ 10.00 |
|
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Finance Accumulation And Monetary Power
Authors: Daniel Woodley
1st Edition
0367338556, 978-0367338558
