A(n) 8.5%, 20-year bond has a par value of $1,000 and a call price of $1,075. (The bond's first call date is in 5 years.) Coupon payments are made semiannually (so use semiannual compounding where appropriate) a. Find the current yield, YTM, and YTC on this issue, given that it is currently being priced in the market at $1,200. Which of these 3 yields is the b. Repeat the 3 calculations above, given that the bond is being priced at $450. Now which yield is the highest? Which is the lowest? Which yield would you use to value this bond? Explain. a. If the bond is priced at $1,200, the current yeld is 1% (Round to two decimal places.) The annual yield to maturity with semiannual compounding is 1% (Round to two decimal places.) The annual yield-to-call with semiannual compounding is 1% (Round to two decimal places.) Which of these 3 yields is the highest? Which is the lowest? (Select from the drop-down menus.) is the highest, while Which yield would you use to value this bond? (Select the best answer below) OA The yield-to maturity because the bands may not be called I OB The yield-to-call because convention is to use the lower more conservative measure of yield OC It doesn't matter which yield you use OD. The yield-to-maturity is always used is the lowest A(n) 8.5%, 20-year bond has a par value of $1,000 and a call price of $1,075. (The bond's first call date is in 5 years.) Coupon payments are made semiannually (so use semiannual compounding where appropriate). a. Find the current yield, YTM, and YTC on this issue given that it is currently being priced in the market at $1,200. Which of these 3 yields is the highest? Which is the lowest? Which yield would you use to value this bond? Explain. b. Repeat the 3 calculations above, given that the bond is being priced at $850. Now which yield is the highest? Which is the lowest? Which yield would you use to value this bond? Explain b. If the bond is priced at $850, the current yield is % (Round to two decimal places) The annual yield-to-maturity with semiannual compounding is % (Round to two decimal places) The annual yield-to-call with nomiannual compounding in % (Round to two decimal places) Which of these 3 yields in the highest? Which is the lowest? (Select from the drop-down menus.) in the highest, while is the lowest Which yield would you use to value this bond? (Select the best answer below) A. The yield to maturity because convention is to use the lower of yerdo to maturity or yield-to-call for bonds soling at a discount OB. The yield-to-matunity is always used C. It doesn't matter which yield you use. OD The yield to maturity because the bonds may not be called Click to select your answer(s)
