Explore BrainMass

Explore BrainMass

    Yield To Maturity and To Call

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

    Yield to maturity: A firm's bonds have a maturity of 10 years with a $1,000 face value, and a 8 percent semiannual coupon, are callable in 5 years at $1,050, and currently sell at a price of $ 1,100. What are their yield to maturity and their yield to call? What return should investors expect to earn on this bond?

    © BrainMass Inc. brainmass.com June 3, 2020, 5:28 am ad1c9bdddf
    https://brainmass.com/business/bond-valuation/yield-to-maturity-and-to-call-249225

    Solution Preview

    The yield to maturity of a debt instrument is the rate which equalizes its purchase price (present value) with the periodic interest payments (an ...

    Solution Summary

    Using an Excel spreadsheet, this solution illustrates how to compute the yield to maturity and the yield to call on a callable bond.

    $2.19

    ADVERTISEMENT