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Problem 1 8 - 2 6 Make - Whole Call Premium ( LO 2 , CFA 5 ) Assume that Kendal Corp. has an outstanding
Problem MakeWhole Call Premium LO CFA
Assume that Kendal Corp. has an outstanding bond issue with a par value of $ and a current market price of $ per bond.
The bond has nine years remaining and a coupon rate of percent. Use Excel to answer this question. Enter your answer as a
percent rounded to decimal places.
a Find the current yield to maturity for the Kendal Corp. bond. Do not round intermediate calculations. Enter your answer as a
percent rounded to decimal places.
Yield to maturity
b If the bond trades at a yield spread of percent above comparable US Treasury notes, what must the current yield on Treasury
notes beDo not round intermediate calculations. Enter your answer as a percent rounded to decimal places.
Treasury yield
c If the Kendal bond has a makewhole call premium of basis points above the US Treasury rate, what is the makewhole call
premium? Do not round intermediate calculations. Enter the makewhole yield answer as a percent rounded to decimal places.
Enter the makewhole price answer in dollars rounded to decimal places.
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