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Problem:

Alex plans to purchase a callable bond of Horizon Inc. The bond is 20-year to maturity, carry 10.5% annual coupon, paid semi-annually, and have a$1,000 par value. The bond is selling now for $1,187.40 each. The bond can be called back in 5 years at a call price $1,050.50.

Required:

Question: What is the yield to call for these bonds?

Note: Please show how to work it out.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91163419

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