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CF1 - 10p Question Hennes & Mauritz have just issued a ten-year callable, 5% coupon bond with annual coupon payments. The bond can be called

CF1 - 10p Question Hennes & Mauritz have just issued a ten-year callable, 5% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime therafter on a coupon payment date. It has a price of $102 and a face value of $100. a. What is the bond's yield to call? % (answer in percentage form with two decimals; for example 4.54 and not 0.0454). b. What is the bond's yield to maturity? % (answer in percentage form with two decimals; for example 4.54 and not 0.0454). Hint: use a financial calculator, Excel's RATE formula or trial-and-error by hand (or with excel) within the interval 4% - 6%. c. What is the Yield to Call if instead we suppose that the coupon payments are made semiannually and the coupon rate is 5%. The Yield to Call stated in yearly format is then % (answer in percentage form with two decimals; for example 4.54 and not 0.0454). Hint: use a financial calculator, Excel's RATE formula or trial-and-error by hand (or with excel) within the interval 2% - 4% of the yearly rate.

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