What is yield to call

    • [DOC File]Soln Ch 13 Bond prices

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      The call feature requires the firm to offer a higher coupon (or higher promised yield to maturity) on the bond in order to compensate the investor for the firm's option to call back the bond at a specified price if interest rate falls sufficiently.

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    • [DOC File]Answers to Text Discussion Questions

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      Yield to call. 12. a. Using the facts given in problem 11, what would be the yield to call if the call can be made in four years at a price of $1,080? Use Formula 12–3. b. Explain why the answer is lower in part a than in problem 11. c. Given a call value of $1,080 in four years, is it likely that the bond price would actually get to $1,160 ...

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    • [DOC File]Bond Yields and Prices

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      Realized yield (Effective Yield) = er - 1. Yield to Call. Use the YTC when bond is likely to be called (selling at a premium) Yield based on the deferred call period. Deferred period: Callable bonds often have a deferred period during which the bond cannot be called. Call Value: Bonds are called at a price different than the maturity value.

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    • [DOC File]CHAPTER 7

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      Yield to call--semiannual bond Answer: b Diff: M N. A 10-year bond sells for $1,075. The bond has a 9 percent semiannual coupon and a face value of $1,000. (That is, the bond pays a $45 coupon every six months.) The bond is callable in 5 years and the call price is $1,035. What is the bond’s nominal yield to call?

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    • [DOC File]Answers to Text Discussion Questions

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      Yield to maturity is the same concept as internal rate of return or true yield because it is the interest rate (i) at which you can discount the future coupon payments (Ct) and maturity value (Pn) to arrive at a known current value (V) of the bond. 6. What is the significance of the yield-to-call calculation? 12-6.

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    • [DOC File]Quantitative Problems Chapter 10

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      14. A 20-year $1,000 par value bond has a 7% annual coupon. The bond is callable after the 10th year for a call premium of $1,025. If the bond is trading with a yield to call of 6.25%, the bond’s yield to maturity is what? Solution: The current price of the bond is computed using the yield to call as follows:

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    • [DOC File]First, you have to do problem 4-9 using a financial calculator

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      Using the formulas given, calculate current yield and capital gain/loss. Problem d. Using the same rate function to calculate yield to call. However, remember to change the input corresponding to call data, i.e., Nper in this case is the period till callable, fv in this case is not the par value, it is the call price. Pmt and pv are still the same.

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    • [DOC File]Econ 175 - University of California, San Diego

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      a. The yield to call is the value of i which satisfies: Using Excel, or plugging into a financial calculator n = 10, PV =price= 1124.72, FV = 1100, PMT = 40, gives us i=yield to call = 3.368% semiannually. b. We use the same formula as in part a, except with the call value of $1,050 replacing $1,100, and therefore solve the following expression ...

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