4. (25 points) You are evaluating a bond. It has a 30-year maturity, and the lock...

 

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4. (25 points) You are evaluating a bond. It has a 30-year maturity, and the lock out period for the call feature is 15 years. If called at year 15, the price paid for the bond is 115%. The par value is $1000, and the coupon is 10% paid annually. Your required rate is 9%, and the current market price of the bond is $1,110. a. What is the current value of the bond to you? Should you invest? b. What is the Current Yield of the bond? What is the YTM and the YTC for the bond (use the RATE function in excel)? 4. (25 points) You are evaluating a bond. It has a 30-year maturity, and the lock out period for the call feature is 15 years. If called at year 15, the price paid for the bond is 115%. The par value is $1000, and the coupon is 10% paid annually. Your required rate is 9%, and the current market price of the bond is $1,110. a. What is the current value of the bond to you? Should you invest? b. What is the Current Yield of the bond? What is the YTM and the YTC for the bond (use the RATE function in excel)?