You are interested to invest in bond market. Currently there is a callable bond issued by 3G
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You are interested to invest in bond market. Currently there is a callable bond issued by 3G Corporation with the following information.
Issuer | 3G Corporation |
Coupon rate | 8% |
Coupon payment | Semi-annually |
Nominal value | $1,000 |
Callable period | First par call in 3 years |
Offer period | 15 May – 30 May 2022 |
Value date | 6 June 2022 |
Maturity date | 6 June 2027 |
Issuer’s credit rating | Moody’s rating: BaB, S&P’s rating: BBB |
Suppose that yield of similar credit rating bond is 6% and trend of interest rate seems to be decline in next 5 years.
a. Compute the bond price at value date.
b. Compute the yield to first call.
Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
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