Two part bond yield to maturity and yield to call

label Business & Finance
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Four years ago Messy House Painting issued a 20-year bond with a $1000 maturity value and a 4 percent coupon rate of interest.  Interest is paid semiannually.  The bond is currently selling for $714.

A) What is the bond's yield to maturity?

B) If the bond can be called in three years for a redemption price of $1040, what is the bond's yield to call?

Apr 2nd, 2015

A. 

Market price $714.00
Par value $1,000.00
Interest 4.00%
Frequency 2
N(Years) 16
YTM 7.00%

B.

Market price $714.00
Par value $1,000.00
Redemption at call $1,040.00
Interest 4.00%
Frequency 2
N(Years) 3
Yield to call 17.77%

Apr 2nd, 2015

thank you...but what formula did you use to get these solutions?

Apr 2nd, 2015

I did it on excel..there are formulas in excel to calculate ytm...=yieldmat(....)

Apr 2nd, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Apr 2nd, 2015
...
Apr 2nd, 2015
Jun 29th, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer