Question

2) A 10-year, 10% semiannual coupon bond selling for $1,135.90 can be called in 4 years for $1,050 (hint: par value is $1,000). Draw the Time line? Show your work What is its yield to maturity (YTM)? Show your work What s its current yield (CY)? Show your work What is its yield to call (YTC)? Show your work.

Answer 1

The answer and procedures of the exercise are attached in the following 2 images.

Explanation

FILE HOME INSERT DATA REVIEWVIEW Tell me what you wa fc 1 time to maturity years) 2 time to maturity(semi-annual) 3 coupon rate 4 par value 5 annual coupon 6 semiannual coupon 7 price 8 semiannual YTM 9 Annual YTM 10 call price 11 time untill call 12 time untill call(semi-annual) 13 semi-annual YTC 14 annual YTC 15 current yield 16 10 formulas 20 B1*2 1000 100 B3 B4 0 B5/2 1135.9 4% RATE(B2,B6,-B7,B4) 8.00% B8*2 1050 4 8 B11*2 3.57% RATE(B12,B6,-B7,B10) 7.14% B13"2 8.80% B5/B7

2) YTM = ANNUAL YTM

3) YTC = Annual YTC