1 a 1000 par semiannual bond is first callable in 5 years, Ask an Expert

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1. A $1,000 par, semiannual bond is first callable in 5 years at 108% of par. The bond pays an 8% coupon and exactly 15 years remaining until maturity.

If an investor pays $895 for the bond, the bond’s yield to first call is closest to:

A 4.65%.

B 6.03%.

C 9.31%.

D 12.07%.

2. An analyst observes a 4-year, $1,000 par, semiannual-paying corporate bond with a coupon rate of 7.125% and currently priced at 102.347% of par. The bond is callable at 101% of par in two years and also putable at par in two years.

The bond’s yield to put is closest to:

A 2.932%.

B 4.225%.

C 5.864%.

D 6.450%.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92428059

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