Question

Asked Nov 3, 2019

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A corporate bond matures in 14 years. The bond has an 8% semiannual coupon and a par value of $1,000. The bond is callable in five years at a call price of $1,050. The price of the bond today is $1,075. What are the bond’s yield to maturity and yield to call?

Step 1

Calculate the yield to maturity as follows:

MS-Excel --> Formulas --> Financials --> Rate

Step 2

Therefore, the yield to maturity is **7.14%**.

Step 3

Calculate the yield to call as follows:

MS-Excel --&g...

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