On January 3, 2023 Goldman Sachs issued a 5-year, callable bond with an annual coupon rate...

 

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On January 3, 2023 Goldman Sachs issued a 5-year, callable bond with an annual coupon rate of 5.625% payable semi- annually on July 3rd and January 3rd each year. The bond may be called, at par, beginning on January 3, 2024 and every three months thereafter until the maturity date (January 3, 2028). Discuss the yield on this bond in relation to the current interest rate environment (yields on similar credit quality bonds with similar maturities, current 5-year U.S. Treasury yields, and interest rate forecasts for the next 5 years). Why would investors find this bond attractive? Or is it? What would be the pros and cons of investing in this bond? Why would Goldman Sachs issue a bond with these characteristics (5-year maturity, callable after 1 year, etc.)? On January 3, 2023 Goldman Sachs issued a 5-year, callable bond with an annual coupon rate of 5.625% payable semi- annually on July 3rd and January 3rd each year. The bond may be called, at par, beginning on January 3, 2024 and every three months thereafter until the maturity date (January 3, 2028). Discuss the yield on this bond in relation to the current interest rate environment (yields on similar credit quality bonds with similar maturities, current 5-year U.S. Treasury yields, and interest rate forecasts for the next 5 years). Why would investors find this bond attractive? Or is it? What would be the pros and cons of investing in this bond? Why would Goldman Sachs issue a bond with these characteristics (5-year maturity, callable after 1 year, etc.)?

Answer rating: 100% (QA)

The yield on the Goldman Sachs 5year callable bond is 5625 This is higher than the current 5year US Treasury yield of 25 but lower than the yield on s... View the full answer