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You have the information about the bonds below with the various terms and features associated with these bonds, such as yield to maturity, call provisions,
You have the information about the bonds below with the various terms and features associated with these bonds, such as yield to maturity, call provisions, convertibility, duration, convexity and the like.
Issuer | Face Value | Coupon Rate | Rating | Quoted Price | Years until Maturity | Sinking Fund | Call Period |
Transatlantic | $1,000 | 8% | AAA | $1,020 | 10 | Yes | 3 Years |
Medlife | $1,000 | 6% | AAA | $1,000 | 10 | No | 5 Years |
XYZ Company | $1,000 | 5% | AA | $940 | 10 | Yes | 5 Years |
XYZ Company | $1,000 | 0% | AA | $820 | 15 | Yes | NA |
- Please mention the type of each bond (premium, discount, par, zero coupon bonds?)
- Please calculate the nominal and effective yield to maturity of each bonds assuming that the bonds pay the coupons semiannually.
- Please assume that you buy these bonds, reinvest any coupons received at the rate of 4% per year, and hold them until mature, what will be your realized return for each bond?
- What is a call period?
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