A 10-year, $1,000 par, 6% coupon bond (coupon paid semiannually), with a current price of 106.25%, the bond is callable after 5 years at a price of 102%.

a. What is the yield to maturity?

b. What is the yield to call?

c. If you are a 40% taxpayer and you earn 4% on a municipal bond, what is your pretax return?

d. You have a 5 year 5% coupon bond, paid "annually", with a yield to maturity of 6%,

i. What is the Modified duration?

ii. For a yield increase of 20 basis points, what is the projected price change using modified duration?

Answer rating: 100% (QA)

a What is the yield to maturity The yield to maturity YTM is the discount rate that makes the present value of all future cash flows from a bond equal ... View the full answer