Question

Consider a 20-year callable annual coupon bond with a face value of $1000 and a coupon rate of 8%. The bonds can be called after 5 years for a price of $1070 and is currently selling in the market for $1145. Calculate the yield to call. 6.67% 8.77% 6.21% 8.15% 5.81%

Answer 1

Answer:

5.82%

Explanation:

NPER = 5

PMT = 80

FV = 1,070

PV = 1145

RATE = YTC

Yield to call = RATE(Nper, Pmt, -PV, FV)

Yield to call = RATE(5, 80, -1145, 1070)

Yield to call = 0.058207481

Yield to call = 5.82%