A corporate bond has a 10-year maturity and pays interest semiannually. The quoted coupon rate is 6%, and the bond is priced at par. The bond is callable in 3 years at 110% of par. What is the bond's yield to call?

Question

Quizplus · Accepted Answer

11eaaae8_8b5c_2e18_a4b8_eb22b69a9a9b_TB6474_11 11eaaae8_8b5c_2e19_a4b8_65073ab9ecc9_TB6474_11 + 11eaaae8_8b5c_2e1a_a4b8_89b66725f9e0_TB6474_11 1,000 =
r/2 = 4.489%
r = YTC = 8.98%
Calculator entries are N = 6, PV = −1,000, PMT = 30, FV = 1,100, CPT I/Y → 4.4892 (semiannual)
Annual YTC = 2 × 4.4892 = 8.9784

A Corporate Bond Has a 10-Year Maturity and Pays Interest