Explore BrainMass

Explore BrainMass

    Yield to maturity & the Yield to call

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A bond with 25 years to maturity and 5 years to call sells for $964.50 and has an annual coupon rate of 11%. The bond will pay a call premium of one extra year's interest. The bond pays coupons semiannually.

    Calculate the yield to maturity.
    Calculate the yield to call.

    © BrainMass Inc. brainmass.com March 4, 2021, 9:10 pm ad1c9bdddf

    Solution Preview

    The yield to maturity is the discounting rate that would make the present value of interest and principal equal to the price today. In the same way, the yield to call is the discounting rate that would make the ...

    Solution Summary

    The solution explains how to calculate the yield to maturity and yield to call on bond.