A 10% coupon bond with annual payments and 10 years to maturity is callable in three years at a call price of $1,100. If the bon
d is selling today for $975, the yield to call is:
A. 10.26%.
B. 13.98%.
C. 9.25%.
D. 10.00%.
E. None of the options are correct.
A. 10.26%.
B. 13.98%.
C. 9.25%.
D. 10.00%.
E. None of the options are correct.
1 answer:
Answer:
Option (B).
Explanation:
According to the scenario, computation of the given data are as follows:
Time period ( Nper) = 3 years
Coupon rate = 10%
So, Payment = $100
Present value = $975
Future value = $1,100
So, we can calculate the yield to call by using rate formula in excel.
The attachment is attached below:
Yield to call = 0.1398 or 13.98%
You might be interested in
Answer:
1/N
Explanation:
Herfindahl-Hirschman Index is used to measure the market concentration and market competitiveness of firm(s).
A major advantage of this index is that it is easy to calculate while using small amount of data required for calculation.
It been used by government agencies such as the U.S. Department of Justice for cases involving mergers and acquisition.
Since we are concerned with the minimum possible value we divide .