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Can you help me with this assignment? Last year Clark

Can you help me with this assignment?

Last year Clark Company issued a 10 year, 12% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called 4 years at a price of $1,060 and it sells for $1,100.

A. What are the bond's nominal yield to maturity and its nominal yield to call? Would an investor be more likely to earn the YTM or the YTC?

B. What is the current yield? Is this yeild affected by whether the bond is likely to be called?

C. What is the expected capital gains (or losses) yield for the coming year? Is this yield dependent on whether the bond is expected to be called?

Solution Preview

If the bond is called: PV=1100, FV=1060
If the bond is not called: PV: 1100, FV:1000

A. using BA 2 plus a calculator:
If it didn't get ...

$2.19