Regal Health Plans issued a ten-year, 12 percent annual coupon bond a few years ago. The bond now sells for $1,100. The bond has
a call provision that allows Regal to call the bond in four years at a call price of $1,060. The bond has a cell provision that allows Regal to call the bond in four years at the call price of $1,060.
a. What is the bond's yield to maturity?
b. What is the bond's yield to call?
a. What is the bond's yield to maturity?
b. What is the bond's yield to call?
2 answers:
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As a seller we would receive $1,041.25
<u>Solution:</u>
You may receive the bid price of the dealer, of $1,000, or $1,041.25
Prices of treasury bonds are expressed as par value amounts.
The quote price of 104:25 means that the bond is priced at of the par value.
Therefore, if the debt is $1,000, the dollar values to be charged by the borrower should be