Question: Consider the following bond Coupon rate 11 Maturity 18 years Par

Consider the following bond:
Coupon rate = 11% 
Maturity = 18 years 
Par value = $1,000 
First par call in 13 years 
Only put date in five years and putable at par value 
Suppose that the market price for this bond $1,169.
(a) Show that the yield to maturity for this bond is 9.077%.
(b) Show that the yield to first par call is 8.793%.
(c) Show that the yield to put is 6.942%.
(d) Suppose that the call schedule for this bond is as follows:
Can be called in eight years at $1,055
Can be called in 13 years at $1,000
And suppose this bond can only be put in five years and assume that the yield to first par call is 8.535%.What is the yield to worst for this bond?

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  • CreatedAugust 22, 2015
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