The following information relates to Questions
A bond with 5 years remaining until maturity is currently trading for 101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semi-annually. The bond is first callable in 3 years, and is callable after that date on coupon dates according to the following schedule: $\begin{array}{lc}
\text { End of Year } & \text { Call Price } \
\hline 3 & 102 \
4 & 101 \
5 & 100 \
\hline
\end{array}$

-The bond's annual yield-to-maturity is closest to:
A) 2.88%.
B) 5.77%.
C) 5.94%.

Question

The following information relates to Questions 
A bond with 5 years remaining until maturity is currently trading for 101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semi-annually. The bond is first callable in 3 years, and is callable after that date on coupon dates according to the following schedule: $\begin{array}{lc}
\text { End of Year } & \text { Call Price } \
\hline 3 & 102 \
4 & 101 \
5 & 100 \
\hline
\end{array}$

-The bond's annual yield-to-maturity is closest to:
A) 2.88%.
B) 5.77%.
C) 5.94%.

Quizplus · Accepted Answer

The bond's yield-to-maturity (YTM) is closest to 5.77% because it is trading slightly above par value, indicating the YTM is slightly below the coupon rate of 6%. The given call prices and schedule do not directly affect the YTM calculation, which primarily considers the current price, coupon payments, and maturity value.

The Following Information Relates to Questions a Bond with 5

The Following Information Relates to Questions
a Bond with 5