Question
Please solve these questions with full explanation. Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 9%
Please solve these questions with full explanation.
Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 9% with semiannual payments of $45, and a par value of $1,000. The price of each bond in the issue is $1,180.00. The bond issue is callable in 5 years at a call price of $1,090.
1. What is the bond's nominal annual yield to maturity (YTM)? Round your answer to two decimal places. Do not round intermediate calculations.
2. What is the bond's nominal annual yield to call (YTC)? Round your answer to two decimal places. Do not round intermediate calculations.
3. Assuming interest rates remain at current levels, will the bond issue be called? The firm(should or should not) call the bond.
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