Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,175. The bonds may be called in 5 years at 109% of face value (Call price = $1,090).What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.  %What is the yield to call if they are called in 5 years? Do not round intermediate calculations. Round your answer to two decimal places.  %

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Asked Feb 7, 2020
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Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,175. The bonds may be called in 5 years at 109% of face value (Call price = $1,090).

  1. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

      %

  2. What is the yield to call if they are called in 5 years? Do not round intermediate calculations. Round your answer to two decimal places.

      %

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Expert Answer

Calculate the yield to maturity as follows:

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

Finance homework question answer, step 1, image 1

Therefore, the yield to maturity is 8.35%.

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