Insurance companies invest in long-term bonds to align their revenues with their obligations. MetLife recently completed an analysis of its bond portfolio and decided to add $1billion to its 30-year maturity holdings. This segment of the portfolio is investment-grade corporate bonds with a $1,000 face value. GS and BoA presented MetLife with the following two proposals:

GS: A 4.80% semi-annual coupon bond that sells for $1,250 BoA: A 4.30% annual coupon bond that sells for $1,100

1. Calculate each option YTM, CY, and capital gain/loss yield

2. If GS bond is callable at the end of 20 years at a call value of $1,100, calculate YTC

3. If BoA bond is callable at the end of 25 years at a call value of $1,050, calculate YTC

Note: Express all calculations in % with answers rounded to 2 digits as given above

a. GS YTM, CY, and capital gain/loss yield (% with 2 digits) N PMT FV PV I=YTM CY Cap G/L Yield BOA YTM, CY, and capital gain/loss yield (% with 2 digits) N PMT FV PV I=YTM CY Cap G/L Yield b.GS Callable YTC (% with 2 digits) N PMT CV PV I=YTC c. BOA Callable YTC (% with 2 digits) N PMT CV PV I=YTC