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A corporate bond matures in 10 years. The bond has 8 percent semiannual coupon and a par value of $1,000. The bond is callable in
A corporate bond matures in 10 years. The bond has 8 percent semiannual coupon and a par value of $1,000. The bond is callable in five years at a call price of $1,050. The price of the bond today is $1,075.
a)What is the bond's nominal yield of maturity ?
b) What is the bond's nominal yield to call ?
c)If you bought this bond, which return do you think you would actually earn ?
d) Suppose the bond had sold at a discount, would the yield to maturity or the yield to call have been more relevant?
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