Question
Suppose a 10-year, 10 percent, semi annual coupon bond with a par value of $1000 is currently selling for $1,135.90, producing a yield to maturity
Suppose a 10-year, 10 percent, semi annual coupon bond with a par value of $1000 is currently selling for $1,135.90, producing a yield to maturity (YTM) of 8 percent. However, the bond can be called after 5 years for a price of $1,025.
1. What is the bond's yield to call (YTC)?
2. If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?
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Management Science The Art Of Modeling With Spreadsheets
Authors: Stephen G. Powell, Kenneth R. Baker
3rd Edition
0470530677, 978-0470530672
