Calculate the yield to call for call date

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Reference no: EM133123032

Consider the following bond that pay coupons on a semi-annual basis. The bond has a face/par value of $1,000.

Bond A is callable and matures 6/15/2030 with a coupon rate of 3.25%.

Call Date #1 is 12/15/2025 with a call price of 101.00 (percent of par).

Call Date #2 is 6/15/2026 with a call price of 100.50 (percent of par).

Settlement date is 12/15/2021 and the quoted price is 102-23 (percent of par with fraction in 32nds). Accrued interest = 0 since settlement is on a coupon date.

1) Use the YIELD function in excel to calculate the BEY. Verify in excel that you calculated the right yield by adding up the discounted individual cash flows with the result from the YIELD function.

2) Calculate the Yield to Call for call date #1 and #2. Use the YIELD function in excel. What is the Yield to Worst for this bond?

Reference no: EM133123032

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