Question

Keenan industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. the bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,045. what is the bond’s nominal yield to call?

Answer 1

This had a list of choices:
a. 6.77%
b. 4.42%
c. 5.54%
d. 5.59%
e. 5.09%

I used an online calculator and the answer given was B. 4.42%.

See attachment for the formula and calculator.