Answer and Explanation:
The computation is shown below:
For nominal yield to maturity
Given that
NPER = 9 × 2 = 18
PMt = $1,000 ×14% ÷ 2 = $70
PV = -$1,300
FV = $1,000
The formula is shown below:
= RATE(NPER,PMT,-PV,FV,TYPE)
After applying the above formula, the yield to maturity is 9.05%
For nominal yield to call
Given that
NPER = 6 × 2 = 18
PMt = $1,000 ×14% ÷ 2 = $70
PV = -$1,300
FV = $1,060
The formula is shown below:
= RATE(NPER,PMT,-PV,FV,TYPE)
After applying the above formula, the yield to call is 8.34%
As the yield to maturity is more than the yield to call so the bond would be likely to called
