Two part bond yield to maturity and yield to call

Business & Finance
Tutor: None Selected Time limit: 1 Day

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

Are you studying on the go? Check out our FREE app and post questions on the fly!
Download on the
App Store
...
Apr 2nd, 2015
...
Apr 2nd, 2015
Dec 9th, 2016
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