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    Yield to Maturity, Yield to Call

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    Laser Industries has just issued callable ten-year, 8% coupon bonds with semi-annual coupon payments. The bonds can be called at 102 in three years or anytime thereafter on a coupon payment date. The current bond price is 99. For an investment today in these bonds (assuming no transaction costs):

    a. What is an investor's Yield to Maturity?

    b. What is an investor's Yield to Call?

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    https://brainmass.com/economics/bonds/256400

    Solution Preview

    The answers are in the attached file
    Laser Industries has just issued callable ten-year, 8% coupon bonds with semi-annual coupon payments. The bonds can be called at 102 in three years or anytime thereafter on a coupon payment date. The current bond price is 99.  For an investment today in these bonds (assuming no transaction costs):  

    a. What is an investor's Yield to Maturity?

    Yield to maturity

    Yield to maturity can be calculated using Excel worksheet function RATE

    Data
    No of years to maturity= 10
    Coupon rate= 8.00%
    Face value= $1,000
    Frequency = S Semi annual coupon payments
    Redemption (Maturity) value = ...

    Solution Summary

    Yield to Maturity and Yield to Call of a bond have been calculated.

    $2.19