y Home s course ourses Ch 07: Blueprint Problems - Bonds and Their Valuation for PMT, and the call price for FV. Then you can solve for I/YR - YTC. Again, remember you need to make the appropriate adjustments for a semiannual bond and realize that the calculated 1/YR is on a periodic basis so you will need to multiply the rate by 2 to obtain the annual rate. In addition, you need to make sure that the signs for PMT and FV are identical and the opposite sign is used for PV; otherwise, your answer will be incorrect. talog and Study Tools artner Offers ental Options A company is more likely to call its bonds if they are able to replace their current high-coupon debt with less expensive financing. A bond is more likely to be called if its price is Select par-because this means that the going market interest rate is less than its coupon rate. Quantitative Problem: Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 8% with semiannual payments of $40, and a par value of $1,000. The price of each bond in the issue is $1.196.00. The bond issue is cailable in 5 years at a call price of $1,080. ollege Success Tips areer Success Tips What is the bond's current yield? Do not round intermediate calculations. Round your answer to two decimal places % e eligible for a FREE 7. al of Cengage Unlimited Cengage Unlimited eTextbooks What is the bond's nominal annual yield to maturity (YTM)? Do not round intermediate calculations. Round your answer to two decimal places. What is the band's nominal annual yield to call (YTC)? Do not round intermediate calculations. Round your answer to two decimal places Try for Free Learn more Assuming interest rates remain at current levels, will the bond issue be called? The firm Select call the bond elp Ive Feedback Grade it Now Save & Continue Continue without saving