A company issues a callable (at par) five-year, 7% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $110 per $100 of face value. What is the yield to maturity of this bond when it is released?

Question

Quizplus · Accepted Answer

C) Using a financial calculator, PV = -110, FV = 100, PMT = 7, N = 5;
computing interest = 4.71%; yield to maturity = 4.71%

A Company Issues a Callable (At Par) Five-Year, 7% Coupon