A company is going to undertake an issue of $100 million of high yield bonds, with a maturity of 5 years. The bonds are rated BB. The coupon on the bonds is 5%, paid semi-annually. The underwriter is charging a commission of 2%. What is the effective yield on the bonds, from the company's point of view?

Answer rating: 100% (QA)

To calculate the effective yield on the bonds we need to consider the following factors Face value 1... View the full answer