Explore BrainMass
Share

# Yield to Maturity, Yield to Call

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

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?

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